USD/CAD Stable Below 1.4200 as Traders Await Canadian CPI Data

Traders are keeping an eye on the inflation data as the USD/CAD remains below the 1.4200 mark.

The USD/CAD hovered around 1.4185 on Monday with little change while traders anticipated the release of Canada’s Consumer Price Index (CPI) data. The US Dollar Index (DXY) stayed stable as the US markets were shut for Presidents Day.

Canada is anticipated to release its inflation report on Tuesday, revealing a 0.8% year-over-year uptick for January along with a 0.1% monthly increase following December’s 0.4% decline in prices. There is speculation that a lower-than-projected outcome might place strain on the dollar and potentially lead to an increase in the USD/CAD exchange rate.

Concerns surrounding trade are still prominent following the statement by ex-President Donald Trump about implementing tariffs on automobiles in April. During times of heightened tensions in the market, the US dollar stands to gain strength due to its reputation as a secure investment option.

Crucial factors that influence the movement of the dollar include fluctuations in crude oil prices due to Canada’s role as a major oil supplier to the United States. Higher oil prices could bolster the Canadian dollar (CAD), potentially impeding any rise in the value of the US dollar relative to the Canadian dollar (USD/CAD).

Traders will be keeping an eye on the CPI release scheduled for Tuesday to gauge the direction of USD/CAD movement.