Canadian Dollar softer on Tuesday but climbs over weakened Greenback

• The Canadian Dollar had little strength on Tuesday, but US Dollar was weaker.
• Canada remains absent from economic calendar as markets focus on inflation figures.
• US PPI inflation cooled further, US CPI inflation in the barrel for Wednesday.

The Canadian Dollar (CAD) found higher ground against the Greenback but otherwise chalked in a poor performance across the major currencies board on Tuesday. Market sentiment has tilted to the upside after US Producer Price Index (PCI) inflation receded in July, sparking a move back into bets of a double rate cut from the Federal Reserve (Fed) in September.

Canada remains absent from the economic data docket this week, leaving traders to focus squarely on Wednesday’s upcoming US Consumer Price Index (CPI) inflation print. US CPI inflation is expected to continue the trend of cooling toward the Fed’s 2% annual inflation target.

Daily digest market movers: Canadian Dollar loses race with Greenback to the bottom

• CAD softened on Tuesday yet gained one-quarter of one percent against the USD.
• US PPI inflation ticked down to 2.2% YoY in July, less than the forecast for 2.3% and easing further back from the previous period’s revised 2.7%.
• Cooling US inflation figures battered the Greenback, sending the USD down across the board.
• Markets still await Wednesday’s US CPI inflation print, expected to fall in-line with overall declining inflation pressures.
• Rate markets see greater-than-even odds of a double cut of 50 basis points in September from the Fed, up from the start of the week but still below last week’s 70% high.

Canadian Dollar price forecast: Falling Greenback drags USD/CAD down from 1.3750

USD/CAD dove toward 1.3700 on Tuesday, falling back below the 50-day Exponential Moving Average (EMA) at 1.3730. The pair has fallen further back from the 1.3750 technical level as pressures mount on the Greenback, sending the CAD into three-week highs against the US Dollar.

Long-term technicals still favor long positions as the pair continues to trade north of the 200-day EMA at 1.3630, but topside momentum remains limited after USD/CAD bidders failed to capture the 1.3950 peak early last week.

USD/CAD daily chart