USD/CAD flat traces round mid-1.3900s; seems to Canadian inflation knowledge for recent impetus

• USD/CAD continues with its battle to realize any significant traction amid combined cues.
• Softer Crude Oil costs undermine the Loonie and act as a tailwind for the forex pair.
• A subdued USD worth motion caps the pair forward of Canadian shopper inflation figures.

The USD/CAD pair extends its sideways consolidative worth transfer heading into the European session on Tuesday and presently trades round mid-1.3900s, practically unchanged for the day. Furthermore, the combined elementary backdrop warrants some warning earlier than putting aggressive directional bets.

Crude Oil costs battle to draw any significant patrons as a US sovereign downgrade by Moody’s appears to have dampened the financial outlook for the world’s greatest power shopper. Including to this, combined Chinese language macro knowledge launched on Monday weighs on the black liquid, which is seen undermining the commodity-linked Loonie and performing as a tailwind for the USD/CAD pair.

In the meantime, a possible breakdown within the US-Iran nuclear talks has weakened prospects of extra Iranian oil provides and acts as a tailwind for Crude Oil costs. This, together with subdued US Greenback (USD) demand amid bets that the Federal Reserve (Fed) will minimize rates of interest additional in 2025, contributes to capping the USD/CAD pair as merchants keenly await Canadian shopper inflation figures.

Final week’s softer-than-expected launch of the US Shopper Worth Index (CPI) and the Producer Worth Index (PPI) pointed to indicators of easing inflation within the US. Including to this, the disappointing US month-to-month Retail Gross sales knowledge elevated the chance of a number of quarters of sluggish progress. This would possibly pressure the Fed to stay to its coverage easing bias and fail to help the USD to realize any constructive traction.

In the meantime, Canada’s headline Shopper Worth Index (CPI) is seen decelerating sharply to the 1.6% YoY price from 2.3% within the earlier month, which, in flip, will again the case for additional price cuts by the Financial institution of Canada (BoC). The market response to a stronger print, nonetheless, is prone to be restricted amid persistent uncertainty round US President Donald Trump’s reciprocal tariffs.