Ella 
In early Asian trading on Monday, USD/CAD attracted some buyers above the 1.3500 mark. USD/CAD recovers as demand for the U.S. dollar (USD) resumes. Investors are awaiting fresh impetus from Canada’s current account and annual U.S. fourth-quarter (Q4) gross domestic product. As of press time, USD/CAD was trading at 1.3512, up 0.07% on the day.
Canada’s consumer price index (CPI) slowed to 2.9%, beating expectations. This is the first time since mid-2021 that inflation has fallen back into the Bank of Canada’s (BOC) target range. Lower-than-expected inflation suggests the door to interest rate cuts may open sooner than the central bank expects. Meanwhile, lower oil prices could weigh on the commodity-linked Canadian dollar.
On the other hand, hawkish comments from Federal Reserve (Fed) officials about keeping policy rates at a higher level for longer provided some support for the dollar. Last week, Fed Governor Christopher Waller said the Fed should delay cutting interest rates for at least a few more months to see more signals from inflation data.
Next, market participants will focus on U.S. fourth-quarter GDP and Canada’s fourth-quarter current account. Canadian fourth-quarter gross domestic product (GDP) and the U.S. fourth-quarter core personal consumption expenditures price index (Core PCE) will be released on Thursday.
