Canadian Dollar trades steady as Loonie bidding holds firm

• The Canadian Dollar remained pinned into near-term highs on Tuesday.
• Meaningful market moves will come from outside of Canada, putting pressure on CAD traders.
• Canadian economic data is broadly missing from the docket this week.

The Canadian Dollar (CAD) kicked back into recent highs against the US Dollar (USD) on Tuesday, keeping the USD/CAD pair restrained below the 1.3700 handle. Markets are increasingly focused on trade headlines and looming US Consumer Price Index (CPI) inflation data due on Wednesday.

Canada is entirely absent from the economic data docket this week, and that trend will continue until the end of the month, when Canadian inflation figures will be printed. They are not expected to be good, but a lot can change between then and now. US-China trade talks are wrapping up through the overnight session, but market hopes for concise details are unlikely to be fulfilled.

Daily digest market movers: Canadian Dollar at the mercy of US headline and data this week

• The Canadian Dollar pushed back on Greenback gains on Tuesday, keeping USD/CAD pinned near eight-month lows below 1.3700.
• Markets are hoping that US-China trade talks will result in cooling tariff pressures and easing trade restrictions, but any firm policy changes are unlikely to come if they haven't been announced yet.
• US CPI inflation data slated for Wednesday will be the first CPI reference period to include dates after the Trump administration's global "reciprocal" tariffs, and investors are bracing for early price volatility impacts.
• US CPI is expected to rise on an annualized basis, and a hotter-than-expected print could push market hopes for Federal Reserve (Fed) rate cuts could get pushed even further back.
• At the current cut, rate traders are pricing in a return to Fed interest rate cuts in September.

Canadian Dollar price forecast

The Canadian Dollar remains steady, close to its eight-month highs against the US Dollar. The recent weakness of the US Dollar, alongside interest rate holds from the Bank of Canada, has kept the USD/CAD pair below the 1.3700 level.

There is a consistent downward trend since February's highs. That said, technical oscillators are firmly in oversold territory. While this rebound may not be strong enough to disrupt the existing trend, it might indicate an upcoming exhaustion pullback.

USD/CAD daily chart