Ella 
During early European trading on Monday, the USD/CAD currency pair remained restrained below the 1.3400 mark. The pair’s losses were supported by a decline in the US dollar (USD) and a weak US producer price index (PPI) report. The pair is currently trading around 1.3391, with an intraday gain of 0.19%.
The Fed’s easing expectations remain high. Markets have increased the probability of a rate cut by the Fed at its March meeting to nearly 85% from 75% early last week, according to WIRP data. Additionally, the swaps market expects the Fed to ease policy by nearly 175 basis points (bps) this year, up from less than 150 bps early last week. U.S. retail sales data for December will be in focus on Wednesday. The headline figure is expected to rise 0.4% from 0.3% in November.
In terms of the London dollar, the Bank of Canada (BOC) is widely expected to start cutting interest rates this year after successive hikes. The first rate cut could come as early as this spring. The World Investment Report (WIRP) shows that the Bank of Canada is fully prepared to cut interest rates at its April meeting, and the rate cut this year will be close to 150 basis points. Meanwhile, Canada’s consumer price index (CPI) for December released on Tuesday may provide some hints on further monetary policy from the Bank of Canada. Headline inflation is expected to fall to 3.3% from 3.1% in November.
Later on Monday, Canadian wholesale sales, manufacturing sales and the Bank of Canada’s business outlook survey will be released. On Tuesday, market participants will focus on Canada’s December Consumer Price Index (CPI). On Wednesday, attention will shift to U.S. retail sales for December. Traders will look for trading opportunities on the USD/CAD currency pair from this data.
