The Canadian Dollar (CAD) saw a slight rise on Monday as the US Dollar weakened, providing some breathing room for the CAD against other major currencies. Market activity was relatively quiet, with investors lacking significant news to guide their decisions at the start of the trading week.
Looking ahead, Canada is set to release an update on the Canadian Consumer Price Index (CPI) inflation on Tuesday. This report will be a key focus for CAD traders, with Canadian Gross Domestic Product (GDP) data scheduled for release later in the week. In particular, the CPI inflation is expected to decrease slightly to 2.6% from the previous month’s 2.7%, while the Bank of Canada’s (BoC) own CPI core inflation metric is forecasted to remain steady at 0.2% month-over-month.
On the broader market front, investors are eagerly anticipating Friday’s US Personal Consumption Expenditures (PCE) Price Index inflation data, as hopes for a Federal Reserve (Fed) rate cut in September continue to linger. BoC Governor Tiff Macklem also highlighted signs of financial stress, but noted that inflation is trending lower.
In terms of technical analysis, the CAD has been gaining strength against the Greenback, pushing the USD/CAD pair towards a fresh three-week high. The USD/CAD pair is on a downward trajectory, with bids falling below the 50-day Exponential Moving Average (EMA). Long-term support is seen at the 200-day EMA, which is moving towards the 1.3600 level.
Looking at economic indicators, the Gross Domestic Product (GDP) data, released monthly by Statistics Canada, is a key measure of economic activity in the country. A higher GDP reading is generally seen as positive for the Canadian Dollar, while a lower reading is considered bearish. The next GDP release is scheduled for Friday, with a consensus estimate of 0.3%.
Overall, the Canadian Dollar is holding steady against the US Dollar and other major currencies, driven by a combination of factors including economic data releases, market sentiment, and technical analysis. Investors will continue to monitor upcoming reports and indicators to gauge the currency’s performance in the days ahead.