Canadian Dollar momentum fizzles, Loonie digs in after recent gains

• The Canadian Dollar is holding steady following fresh highs against the US Dollar.
• Canadian economic data is strictly low tier this week; inflation and trade data to rule the roost.
• Market sentiment to hinge on US-China trade talks, CPI inflation, and consumer inflation expectations.

The Canadian Dollar (CAD) is taking a breather following a fresh push into eight-month highs against the US Dollar (USD) last week. The Loonie has gained ground or held steady against the Greenback for all but four of the last 15 consecutive sessions, and the latest rate hold by the Bank of Canada (BoC) snapped a seven-straight rate cut streak, giving CAD bidders fresh legs to stand on.

Canadian markets now face a long week full of trade war headlines and key US economic data. After the US and China spent two weeks going to loggerheads over trade, the Trump administration and delegates from Xi Jinping's Chinese government are currently hashing out trade details in London.

Investors are overwhelmingly hoping that US President Donald Trump will once again find a reason to pull back from his own tariff and trade restriction threats dressed up as proclamations. On the data front, price impact from the opening volleys of Trump's import taxes announced at the beginning of the second quarter are expected to begin leaking into headline inflation data, just as consumer inflation expectations are beginning to cool.

Daily digest market movers: Loonie holds onto gains as trade talks dominate

• Following the BoC's first rate hold after seven straight cuts, CAD markets are staring down the barrel of a thin week on the economic data docket.
• USD market flows will continue to dominate as geopolitical headlines on trade leak through US-China trade talks and US inflation data looms large in the week ahead.
• US CPI inflation is expected to begin climbing as Trump's tariffs begin to impact headline inflation data.
• Consumer inflation expectations may be tempering according to survey data from the Federal Reserve (Fed) Bank of New York.
• Investors will wait for University of Michigan (UoM) Consumer Inflation Expectations survey results that will come at the end of the week.

Canadian Dollar price forecast

The Canadian Dollar is holding steady near eight-month peaks against the Greenback. The US Dollar's recent weakness has paired well with interest rate holds from the BoC, helping to keep the USD/CAD pair capped below the 1.3700 handle.

A firm downward trend from February's highs is well in place. However, technical oscillators are pinned firmly in oversold territory, and while the snap may not be enough to break the prevailing trend, it could be a sign that an exhaustion pullback is brewing.

USD/CAD daily chart