Canadian Dollar fluctuates ahead of BoC’s CPI

The Canadian dollar is mostly higher but flat against its US counterpart again. Canada brings BoC CPI inflation to the table on Tuesday. The Canadian dollar was broadly higher on Monday before a moderating pullback halfway through the North American trading session. Momentum remains limited with Canadian markets shuttered for the Victoria Day holiday. CAD traders will officially kick the trading week off on Tuesday, just in time for the Bank of Canada’s (BoC) latest Consumer Price Index (CPI) inflation.

Canada is taking the day off, leaving statements by US monetary policymakers the key market force on Monday as Fed officials make a slew of appearances. Fed policymakers are walking on a tight rope between hawkish and bullish as the US central bank tries to balance sky-high market expectations for rate cuts with a mixed data outlook.

The US central bank remains concerned that inflation could remain a tricky problem to solve, but investors are adamant that the Fed is due for a first rate cut in September.

Canadian Dollar recovers ground, but Greenback takes top spot on Monday, climbing higher and further. Fed speakers flood the newswires on Monday, stressing the need for patience on rate moves with inflation expected by Fed staff to remain too high for too long.

On the data front, Canada’s CPI inflation for the year ended April is expected to tick down to 2.7% from 2.9%. The BoC’s own Core CPI inflation tracker last came in at 2.0% YoY.

Tuesday will feature even more Fed appearances, filling investors’ viewports. Fed officials speak cautiously on policy outlook after April inflation report.

he Canadian Dollar (CAD) gained ground against nearly all of its major currency peers, but buying pressure evaporated, leaving the CAD in the middle ground on Monday. The Canadian Dollar gained around a third of a percent against the Antipodeans, and climbed a quarter of a percent against the Japanese Yen (JPY). On the low side, the CAD shed around a tenth of a percent against the market’s Monday top performers, the Pound Sterling (GBP) and the US Dollar (USD).

USD/CAD continues to go sideways in the near term, treading choppy water between 1.3640 and the 1.3600 handle. Intraday price action remains hampered by the 200-hour Exponential Moving Average (EMA) at 1.3646.

Middling technical action threatens to bake into USD/CAD with daily candlesticks stuck between the 50-day and 200-day EMAs at 1.3635 and 1.3548, respectively. The 1.3600 handle remains a key technical barrier, acting as a magnet pulling down bullish momentum and a price floor hobbling further progress.