USD/CAD flat lines above 1.3650 as investors track US-China trade talk progress, US CPI data

• USD/CAD trades flat around 1.3670 in Wednesday's early Asian session. 
• A potential US-China trade deal could provide some support to the US Dollar. 
• The BoC held the key rate steady but says a future cut is possible.

The USD/CAD pair holds steady near 1.3670 during the early Asian session on Wednesday. Easing trade tension between the United States (US) and China could underpin the US Dollar (USD). Investors will closely monitor the result of the US-China trade talks. Also, the US May Consumer Price Index (CPI) data will take center stage later on Wednesday. 

US Commerce Secretary Howard Lutnick hinted at potential resolutions with China. Lutnick said late Tuesday that the US and China have reached a framework to implement the Geneva Consensus, but they will go back and see if US President Donald Trump approves it. Positive developments surrounding US-China negotiations could stabilize global markets and lift the Greenback. 

The Bank of Canada (BoC) held its key benchmark rate at 2.75% last week, citing US trade policy uncertainty. However, BoC policymakers noted that another rate cut might be necessary if the economy weakened in the face of tariffs. Economists expect two or three additional reductions from the BoC this year, and the final rate by the end of the year would likely end at around 2%. This, in turn, could weigh on the Canadian Dollar (CAD) and act as a tailwind for the pair. 

Meanwhile, a rise in Crude Oil prices might boost the commodity-linked Loonie. It's worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.