Canadian Dollar catches some relief as Greenback eases

• The Canadian Dollar gained a slim 0.3%, but remains mired in congestion.
• Canada remains absent from the data docket on Tuesday.
• Cooler-than-expected US PPI inflation figures calm market tensions.

The Canadian Dollar (CAD) caught a thin bid on Tuesday, bostlered by a general easing in US Dollar flows after US Producer Price Index (PPI) inflation accelerated at a slower pace than markets expected in December. Traders' hopes that this week's US Consumer Price Index (CPI) print will also come in below expectations have been reignited following the PPI print, although the figure is ultimately expected to rise over previous periods.

Canada remains almost entirely absent from the economic data release schedule this week, with only low-tier data on the offering. The Bank of Canada (BoC) is broadly expected to continue trimming rates while the Federal Reserve (Fed) is slated to hold off on any further rates cuts through the first half of 2025, which will widen the CAD's rate differential against the Greenback.

Daily digest market movers: CAD gets a step up thanks to US data

• The Canadian Dollar is up, forcing the USD/CAD pair back down below the 1.400 handle, but market flows remain one-sided as the Loonie lacks intrinsic momentum.
• PPI inflation figures eased broadly below expectations in December, with headline PPI printing at just 0.2% MoM. 
• Investors were expecting a downtick to 0.3% from the previous 0.4%. 
• Core PPI, excluding price increases in volatile food and energy prices, was flat in December versus the forecast of 0.3% and 0.2% last.
• headline PPI inflation rose to 3.3% YoY versus the previous figure of 3.0%, while core PPI accelerated to 3.5% YoY compared to the previous 3.4%.

Canadian Dollar price forecast: CAD set to continue rising as long as market holds off on USD bidding

The Canadian Dollar's gain on Tuesday amounted to one-third of one percent, a scant percentage with the Loonie parked near multi-year lows against the Greenback. Loonie bidders are struggling to push USD/CAD back into the latest swing low into the 1.4300 handle, but USD bulls continue to get wrapped up in a congestion zone around 1.4400, stamping in a tight consolidation range.

A lack of momentum is bleeding clear signals out of momentum oscillators, and long-run moving averages are beginning to catch up to bids, leaving candlesticks exposed to a difficult chart space looking forward.

USD/CAD daily chart