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The Canadian Dollar (CAD) is holding close to multi-month highs against the US Dollar (USD) on Wednesday. The Loonie caught a thin boost from declining Greenback bids, with broad-market investor sentiment bolstered by a cooler-than-expected US Consumer Price Index (CPI). US-China trade talks also wrapped up in London during the overnight session, giving investors hope that trade war rhetoric will continue to cool and pave the way to breaking down the Trump administration’s eye-watering import taxes and tech export restrictions.

Canadian economic data remains largely absent from the economic data docket this week. The trend will be continuing through most of the month as datasets catch a lull. The next batch of Canadian CPI inflation figures is slated to be released at the tail end of the month, on June 24.

Daily digest market movers: Canadian Dollar firms up on Greenback weakness

The Canadian Dollar mostly held flat against the US Dollar on Wednesday, keeping the USD/CAD pair on the defensive below 1.3700.

• US CPI figures broadly came in below expectations, bolstering market bets of a September Federal Reserve (Fed) rate cut.
• According to the CME’s FedWatch Tool, rate traders are pricing in nearly 70% odds of at least a quarter-point trim to the Fed’s main reference rate on September 17.
• Headline US CPI inflation rose less than expected in May, ticking up to 2.4% YoY. Core CPI inflation held flat at 2.8% YoY.
• US Producer Price Index (PPI) inflation figures are up next on Thursday, also expected to hold flat at 3.1% YoY.
• Tariff inflation impacts, if they are coming, will likely appear in business-level inflation metrics first.

Canadian Dollar price forecast

The Canadian Dollar remains stable, situated near its eight-month highs in relation to the US Dollar. The recent depreciation of the US Dollar, coupled with the decision to maintain interest rates by the Bank of Canada, has sustained the USD/CAD pair below the 1.3700 threshold.

Since the peaks observed in February, there has been a persistent downward trajectory. Nevertheless, technical oscillators are decidedly in oversold territory. Although this rebound may lack sufficient strength to alter the overarching trend, it could signify an imminent exhaustion pullback.

USD/CAD daily chart

(Click on image to enlarge)

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