USD/CAD shows resilience, approaching 1.3645 during the Asian session on Wednesday. In January, Canada’s annual inflation rate decreased to 2.3%, coming in below expectations. Market participants prepare for the release of the FOMC Minutes later on Wednesday. The USD/CAD pair is showing an upward movement, reaching approximately 1.3645 in the Asian trading session on Wednesday. The Canadian Dollar shows a decline against the US Dollar following a weaker inflation report and decreasing crude oil prices. The upcoming release of the Federal Open Market Committee Minutes on Wednesday is highly anticipated.
Recent data indicates that Canada’s Consumer Price Index inflation has decreased to 2.3% year-over-year in January, down from 2.4% in December. This figure fell short of the market consensus of 2.4%. This report supports the notion that the Bank of Canada is likely to reduce the key interest rate once more, putting downward pressure on the Loonie relative to the USD. Meanwhile, crude oil prices decline as tensions between the US and Iran ease. Iranian Foreign Minister Abbas Araqchi indicated on Tuesday that both nations have come to an agreement on the primary “guiding principles” during discussions intended to address their enduring nuclear conflict; however, this does not imply that an agreement is on the horizon. This headline negatively impacts the commodity-linked CAD.
Canada stands out as a significant player in the oil export market, and typically, declining crude oil prices exert a detrimental effect on the Loonie. Focus will turn to the FOMC Minutes on Wednesday. The report may provide insights into the future trajectory of interest rates set by the US Federal Reserve. A dovish stance from the Fed may lead to a decline in the US Dollar in the short term.