The Canadian dollar CADUSD steadied against its U.S. counterpart on Tuesday, with the currency unable to break out of its recent trading range ahead of a key U.S. inflation report that could guide expectations for Federal Reserve interest rate cuts.
The loonie was trading nearly unchanged at 1.3660 per U.S. dollar, or 73.21 U.S. cents, after moving in a range of 1.3634 to 1.3690.
“USD-CAD price action is remaining very tight ahead of the US CPI release tomorrow,” said Amo Sahota, director at Klarity FX in San Francisco. “Nevertheless, traders have been trying to nudge some loonie strength since late last week after the stronger employment report.”
Investors are leaning toward the Bank of Canada waiting until July, rather than June, to begin cutting interest rates after data on Friday showed the Canadian economy adding five times the number of jobs that was forecast.
The U.S. consumer price index report, due on Wednesday, is expected to show core inflation slowing to 3.6 per cent on an annual basis in April.
“A softer reading may be enough to support the CAD buyers and give them that extra momentum to break below 1.3600,” Sahota said.
In domestic data, wholesale trade fell by 1.1 per cent in March from February on lower sales in the motor vehicle and motor vehicle parts and accessories subsector.
The price of oil was trading 1.5 per cent lower at $77.91 a barrel but metal prices climbed, including gains for gold and copper. Canada is major producer of commodities.
Canadian government bond yields were mixed across the curve, with the 10-year easing about half a basis point to 3.689 per cent.