USD/CAD trades lower near 1.3710 on higher Crude prices, eyes on CPI Canada

USD/CAD retraces its recent gains, trading lower around 1.3710 during the Asian session on Tuesday. The Canadian Dollar (CAD) receives upward support against the Greenback due to the higher Crude Oil prices.

Western Texas Intermediate (WTI) trades near $77.50 per barrel, by the press time. Market speculation suggests that the Organization of the Petroleum Exporting Countries (OPEC) may decide to cut production even more during its upcoming meeting on November 26.

Canada's Consumer Price Index (CPI) data is set to be released on Tuesday. The year-on-year inflation rate in October is anticipated to have reduced to 3.2% from the previous reading of 3.8%. A decline in inflation could provide the Bank of Canada (BoC) with room to keep its target for the overnight rate unchanged at 5.0% during its December meeting, especially as the central bank has signaled that rate decisions will be influenced by the economic indicators.

US Dollar (USD) encounters challenges as improved risk appetite prevails, driven by expectations of a dovish stance from the Federal Reserve (Fed). Last week's release of softer inflation figures, with the Consumer Price Index (CPI) decelerating to 3.2% (YoY) and the core CPI falling to 4.0% (YoY), has led investors to reconsider the likelihood of a rate hike at the December meeting and contemplate potential rate cuts in 2024.

Traders will closely monitor key US economic indicators, including Existing Home Sales and the Chicago Fed National Activity Index on Tuesday. Additionally, insights from the Federal Reserve's minutes from its recent meeting are eagerly awaited by market participants.