- The USD/CAD continues with its struggle to gain significant traction in mixed signals.
- The recoil in the prices of crude oil weakens to the CAD and acts as a tail wind for the pair of currencies.
- A moderate USD price action limits the torque before the inflation figures to the Canada consumer.
The USD/CAD pair extends its lateral consolidation price movement when entering the European session on Tuesday and is currently negotiated about half of the 1,3900, almost unchanged in the day. In addition, the mixed fundamental background justifies some caution before opening aggressive directional positions.
The prices of crude oil fight to attract significant buyers, since a reduction of the sovereign qualification of the US by Moody’s seems to have tarnished the economic perspectives for the largest energy consumer in the world. To this is added that the mixed macroeconomic data of China published on Monday weigh on the black liquid, which is considered to weaken to the CAD linked to raw materials and act as a tail wind for the USD/CAD torque.
Meanwhile, a possible collapse in nuclear conversations between the US and Iran has weakened the perspectives of more Iranian oil supplies and acts as a tail wind for crude oil prices. This, together with the moderate demand of the US dollar (USD) amid the expectations that the Federal Reserve (FED) will cut the interest rates even more in 2025, it helps to limit the USD/CAD pair while the operators wait with interest in the inflation figures to the Canada consumer.
The last week of the US Consumer Price Index (CPI) and the most soft production price index (IPP) than expected pointed to signs of inflation in decrease in the US. This could force the Fed to maintain their policy flexibility bias and not help the USD gain positive traction.
Meanwhile, the general consumer price index (CPI) is expected to be drastically slowed to an interannual rate of 1.6% from the 2.3% of the previous month, which, in turn, will support the case for additional feats of rates by the Bank of Canada (BOC). However, market reaction to a stronger figure will probably be limited in the midst of the persistent uncertainty around the reciprocal tariffs of US President Donald Trump.
Economic indicator
Consumer Price Index (Yoy)
Statistics Canada It is the entity responsible for publishing the consumer price index, which is a measure of the movement of prices through the comparison between the prices of retail sales of a basket of representative goods and services. The purchasing power of the Canadian dollar is diminished by inflation. He Canada Bank Its objective is an inflation range (1% – 3%). A high reading would anticipate an increase in interest rates and is bullish for the Canadian dollar.
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Next publication:
May 20, 2025 12:30
Frequency:
Monthly
Dear:
1.6%
Previous:
23%
Fountain:
Statistics Canada
Why is it important for operators?
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
