- USD / CAD continues to trade in positive territory early in the US session.
- The annual CPI in Canada was lower than expected for February.
- The US Dollar Index remains below 92.00 before the FOMC.
After trading in a tight range near 1.2450 during the first half of the day, the pair USD / CAD it rose modestly in the first US session and was last seen gaining 0.22% on the day at 1.2470.
Soft Canadian inflation data does not provoke a reaction
Data released by Statistics Canada revealed Wednesday that the Consumer Price Index rose as much as 1.1% annually in February, but it disappointed analysts’ estimate of 1.3%. Additionally, the Bank of Canada’s (BoC) core consumer price index fell to 1.2% from 1.6% in January, compared to the market’s expectation of 1.4%.
However, the soft inflation figures do not appear to have a significant impact on the CAD’s performance against its rivals, as investors remain on the sidelines before the FOMC releases its Statement of Monetary Policy and Economic Projections.
Meanwhile, the US Dollar Index is posting small daily gains around 91.90 with the 10-year US Treasury yield rising more than 2% on the day.
Investors will pay close attention to the long-term interest rate expectations of FOMC policy makers. If the dot plot points to a policy tightening earlier than expected, the dollar could continue to outperform its rivals. However, FOMC Chairman Jerome Powell could downplay concerns about rising inflation expectations and limit the DXY rise during the press conference.
Technical levels
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