• USD/CAD saw early declines before getting bolstered by a weak Canadian CPI.
• Canadian CPI inflation fell to 2.9% from the previous 3.4% YoY.
• Wednesday’s FOMC Meeting Minutes in the barrel as investors focus on rates.

USD/CAD fell to a daily low of 1.3472 on Tuesday before rebounding into an intraday high of 1.3530 after Canadian Consumer Price Index (CPI) inflation fell faster than markets expected. A weaker-than-expected Canadian inflation print softened the Canadian Dollar (CAD) across the board.

Canadian Retail Sales figures are due Thursday, and markets will be pivoting to focus on the Federal Reserve (Fed) and the Federal Open Market Committee (FOMC). The FOMC’s latest Meeting Minutes will drop on Wednesday.

Daily digest market movers: USD/CAD grapples with 1.3500 after Canadian inflation recedes

• Canadian CPI inflation declined to 2.9% for the year ended January, well below the forecast tick down to 3.3% from the previous period’s 3.4%.
• January’s MoM Canadian CPI printed unexpectedly at 0.0% versus the forecasted rebound to 0.4% from the previous month’s -0.3%.
• The Bank of Canada’s (BOC) Consumer Price Index Core for the year through January also declined to 2.4% from 2.6%.
• Investors will be focusing on the FOMC’s latest Meeting Minutes on Wednesday as traders hope for signs the Fed will move closer to rate cuts.
• According to the CME’s FedWatch Tool, money markets are giving a 60% chance of no rate cut in May and 80% odds of at least a 25 basis point cut in June.
• Markets are expecting Thursday’s Canadian Retail Sales to bounce in December.
• MoM Retail Sales are expected to print at 0.8% versus the previous -0.2%, while Retail Sales Excluding Automobiles is forecast to recover to 0.7% from -0.5%.