USD/CAD softens to near 1.4350 after softer US CPI data, BoC cuts interest rate

• USD/CAD edges lower to 1.4365 in Wednesday's late American session. 
• US CPI rose at the slowest pace in four months in February. 
• BoC cut its key interest rate by 25 bps on Wednesday, citing trade uncerainty with the US for the decision.

The USD/CAD pair weakens to near 1.4365 during the late American session on Wednesday. The upside for the Greenback might be limited amid intense tariff uncertainty from US President Donald Trump and fears of a US recession.

US inflation rose at the slowest pace in four months in February. Data released by Labor Statistics on Wednesday showed that the US Consumer Price Index (CPI) increased 0.2% MoM in February after a sharp 0.5% advance in January. This figure came in softer than the expectation of 0.3%. The core CPI, excluding volatile food and energy categories, rose 0.2% MoM during the same period. 

This inflation report fueled speculation that the US Federal Reserve (Fe) may cut rates sooner than previously thought. This, in turn, might drag the US Dollar (USD) lower against the Canadian Dollar (CAD) in the near term. 

As widely expected, the Bank of Canada (BoC) on Wednesday decided to cut its key interest rate by 25 basis points (bps), bringing it down to 2.75%. This was the BoC's seventh consecutive interest rate cut. A move that comes just hours after US President Donald Trump issued new steel and aluminum tariffs against Canada.

BoC governor Tiff Macklem said during the press conference, "In recent months, the pervasive uncertainty created by continuously changing U.S. tariff threats has shaken business and consumer confidence." Tu Nguyen, economist at RSM Canada, said the uncertainty was hurting Canadian growth and another round of tariffs in April could limit the BoC's options even more. This might exert some selling pressure on the Loonie and help limit the pair's losses.