The USD/CAD currency pair traded within a narrow range on Tuesday as market players awaited the key US CPI report that may provide further clues on the timing of the Federal Reserve’s first rate cut.
Another highlight this week will be the minutes of the Fed’s policy meeting in March, to be released on Wednesday.
Annual headline consumer inflation in the United States probably picked up to 3.4% in March, according to market consensus, from 3.2% in February.
Annual core CPI inflation probably eased to 3.7% in March from 3.8% in February – an almost three-year low.
US Treasury yields rose as market players trimmed bets on the pace and scale of Federal Reserve rate cuts this year.
About 60 basis points of rate cuts are now priced in, compared with 75 basis points projected by the Federal Reserve.
US 2-year yield touched an over four-month high of 4.8010% on Tuesday, while the 10-year yield was last at 4.4135%.
Meanwhile, the Bank of Canada is largely expected to leave its target for the overnight rate intact at 5% at its April meeting.
In March, the BoC said it would persist in its policy of quantitative tightening until it saw further and sustained easing in core inflation.
Currency Pair Performance
As of 7:31 GMT on Tuesday the USD/CAD currency pair was inching up 0.07% to trade at 1.3581.
Last week, the major Forex pair went up as high as 1.3647. The latter has been the pair’s strongest level since November 27th 2023 (1.3661).
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