The USD/CAD pair has experienced a modest recovery from a one-month low, with traders showing caution ahead of the release of Canadian inflation figures. Sliding Crude Oil prices have contributed to the Loonie’s weakness, while a slight USD rebound has supported the pair’s recovery.

The upcoming Canadian CPI data is expected to show a decline for the second consecutive month, signaling slowing inflation and potentially leading to a more accommodative policy by the Bank of Canada. This could further weaken the CAD and help the USD/CAD pair gain momentum.

Additionally, the ongoing decrease in Crude Oil prices, driven by optimism surrounding a ceasefire in Gaza, is weighing on the Loonie. This, combined with the USD’s recovery and market sentiment favoring a Fed rate-cutting cycle, is influencing the pair’s movements.

Looking ahead, traders are awaiting the release of the July FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium for further direction. These events will impact the USD and provide clarity on the future path of the USD/CAD pair.

Economic Indicator: Consumer Price Index (YoY)

The Consumer Price Index (CPI) is a key indicator released monthly by Statistics Canada, reflecting changes in prices for Canadian consumers. A high YoY reading is bullish for the CAD, while a low reading is bearish. The next release is scheduled for Tue Aug 20, 2024, with a consensus of 2.5%.

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