Canadian Dollar Trades Flat Amid Light Economic Calendar

The Canadian Dollar flattened on Monday as the new trading week began with a data-light economic calendar. Investors are focusing on rate cut expectations from the Fed with updates to US inflation data due later in the week.

On the Canadian front, there was a sharper-than-expected decline in new Building Permits issued in March, but data from early in the housing cycle remains low-tier and limited-impact. Canadian economic data remains low-priority for the rest of the week, leaving market participants to focus on the US Producer Price Index (PPI) due on Tuesday, followed by US Consumer Price Index (CPI) inflation and Retail Sales on Wednesday.

Canadian Building Permits issued in March declined -11.7%, far below the -4.6% forecast, the sharpest decline in MoM Building Permits since June of 2023. The latest Survey of Consumer Expectations from the New York Fed noted that surveyed consumers expect inflation to rise to 3.3% over the next year, higher than the previous survey’s 3.0%. Economists still expect a quarter-point cut from the Fed by September despite none expecting inflation to reach the Fed’s 2% target before 2026.

The USD/CAD is struggling to find momentum on Monday, holding in place near 1.3680. Bids are treading water just above a near-term supply zone from 1.3660 to 1.3615. Topside momentum is capped by the 200-hour Exponential Moving Average (EMA) just below the 1.3700 handle, while short-sellers have been unsuccessful in dragging the pair back down to 1.3600.