Canadian Dollar churns on quiet Monday as investors await Canadian CPI

• Thin Monday market churn as traders wait for big data prints this week.
• Canada, US both have bank holidays on Monday, throttling trading volumes.
• Tuesday brings Canadian CPI inflation, US FOMC Meeting Minutes on Wednesday.

The Canadian Dollar (CAD) is stuck in a near-term technical range as the new trading week kicks off with a thin market profile. Canadian and US financial institutions are dark on Monday, with two-thirds of Canadians taking the day off. Canada’s financial sector, specifically the Toronto Stock Exchange, is closed for the day. The US is also observing Presidents’ Day, and American institutions will start the new trading week on Tuesday.

Canada brings another Consumer Price Index (CPI) inflation print on Tuesday, and broader markets will be keeping a close eye on Wednesday’s Federal Open Market Committee (FOMC) Meeting Minutes as investors look out for how close the US Federal Reserve (Fed) is to cutting interest rates.

Daily digest market movers: Canadian Dollar churns in flat-sided markets

• The Canadian Raw Material Price Index rose 1.2% in January versus December’s -4.9%.
• Canadian MoM Industrial Product Prices shrank a scant -0.1% in January compared to December’s -1.6% (revised slightly from -1.5%).
• Both metrics are decidedly low-impact, barely moved the needle despite Raw Materials posting a fourth straight month in contraction territory.
• Tuesday’s YoY Canadian CPI inflation is expected to tick down slightly to 3.3% from the previous period’s 3.4%.
• MoM Canadian CPI inflation is expected to rebound to 0.4% in January from December’s -0.3%.
• Canada CPI Preview: Inflation likely eased in January.
• Canadian Retail Sales slated for Thursday are expected to show a MoM rebound to 0.8% in December compared to November’s -0.2%.
• Wednesday’s FOMC Meeting Minutes will pull the veil back on the Fed’s internal discussions about the US central bank’s interest rate stance.
• According to the CME’s FedWatch Tool, money markets are expecting a first rate trim from the Fed in June, with over 90% odds of another rate cut in July.

Technical analysis: Canadian Dollar mixed on quiet Monday

The Canadian Dollar (CAD) spreads on Monday, mixed against the major currency basket at the start of the new trading week. The CAD is up a scant tenth of a percent against the Euro (EUR) and the Pound Sterling (GBP) but down a fifth of a percent against the broadly-recovering New Zealand Dollar (NZD) on Monday.

The USD/CAD is cycling within near-term technical boundaries near 1.3500, and the pair remains just north of a supply zone between 1.3440 and 1.3420. The pair spent most of the last week closing last Tuesday’s Fair Value Gap (FVG), and traders will be looking for a break of structure to bring the USD/CAD back into buying territory below 1.3460.

USD/CAD remains hampered by the 200-day Simple Moving Average (SMA) at 1.3478, and near-term price action is finding thin but steady technical support from the 50-day SMA near 1.3410.

USD/CAD hourly chart

USD/CAD daily chart