Ella 
In early Asian trading on Tuesday, USD/CAD was trading within a narrow range of 1.3495-1.3515. Investors are awaiting economic data due to be released this week to bring new catalysts. U.S. and Canadian gross domestic product (GDP) will be released on Wednesday and Thursday respectively. The pair is currently trading around 1.3507, up 0.01% on the day.
Federal Reserve Chairman Jerome Powell said last month that the central bank wanted to gain more confidence that inflation was falling sustainably to its 2% target before cutting interest rates. In addition, FOMC meeting minutes showed that several policymakers were concerned about the risks of cutting interest rates too quickly. Dovish comments and data-driven approach from Fed officials weighed on the US dollar (USD) and was bearish for USD/CAD.
In the Canadian dollar, Canada’s January CPI inflation data slowed more than expected to 2.9%. The report sparked speculation that the Bank of Canada (BOC) would cut interest rates early. The Bank of Canada’s next monetary policy meeting is scheduled for March 6, with investors expecting interest rates to remain at 5.0%. However, the market has raised the probability of a rate cut at the April meeting to 58% from 33% before the CPI data.
U.S. durable goods orders, consumer confidence and the Richmond Fed manufacturing index will be released on Tuesday. In addition, Federal Reserve official Michael Barr will speak later in the day. U.S. and Canadian fourth-quarter GDP will be the highlight of the week. This event could spark market volatility and provide direction for USD/CAD.
