USD/CAD holds positive ground above 1.4300 as US CPI rises, Oil prices fall

• USD/CAD edges higher to around 1.4305 in Wednesday's late American session. 
• BoC Meeting Minutes showed policymakers await more signs of tariff inflation. 
• The US CPI came in hotter than expected in January. 

The USD/CAD pair trades on a stronger note near 1.4305 during the late American session on Wednesday. The fall in crude oil prices exerts some selling pressure on the commodity-linked Canadian Dollar (CAD). Later on Thursday, traders will keep an eye on the US weekly Initial Jobless Claims and Producer Price Index (PPI). 

The Bank of Canada (BoC) released its latest Meeting Minutes on Wednesday. The BoC governing council noted that retaliatory measures by Canada and other nations would put upward pressure on inflation. The Canadian central bank governing council added that increased uncertainty due to the US tariff threat also supported the case for a cut. The BoC emphasized that even if no tariffs were imposed, a long period of uncertainty would almost certainly damage business investment.

Meanwhile, crude oil prices edge tumbles on the day as US President Donald Trump called Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy to discuss ending the war in Ukraine. This, in turn, drags the commodity-linked Loonie lower and creates a tailwind for USD/CAD. It's worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.

Wednesday's data showed the Consumer Price Index (CPI) grew by more than expected at the start of the year. The so-called core CPI, which excludes food and energy costs, increased 0.4% MoM in January versus 0.2% prior, the largest rise since March 2024. Following the new data, traders expected just one quarter-point rate cut this year, down from two reductions before the CPI report. 

Federal Reserve (Fed) Chair Jerome Powell said the recent inflation data showed that while the central bank has made substantial progress toward taming inflation, there is still more work to do. The cautious stance of the US central bank is likely to support the Greenback in the near term.