USD/CAD Steady as Markets Await Key US Inflation Report

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3690-1.3930

Euro                 1.5530-1.5760

Sterling            1.8500-1.8720

WTI Oil (opening level) $61.60

The CAD/USD is opening at 1.3808 ( 0.7242 )

USD/CAD saw a positive traction on Friday and reverses a part of the previous day's retracement slide from the 1.3860 area, or a one-week high. Spot prices stick to modest intraday gains around the 1.3815 region heading into the European session as traders keenly await the release of the crucial US Personal Consumption Expenditure Price Index.

The US inflation report will play a key role in influencing market expectations about the Federal Reserve's rate-cut path, which, in turn, will drive the USD demand and provide a fresh directional impetus to the USD/CAD pair. In the meantime, some repositioning trade assists the USD to attract some dip-buyers following Thursday's dramatic turnaround. Apart from this, weaker Crude Oil prices undermine the commodity-linked Loonie and act as a tailwind for the currency pair.

Any meaningful USD appreciation, however, still seems elusive in the wake of concerns about the worsening US fiscal situation. Furthermore, traders have been pricing in the possibility that the Federal Reserve will lower borrowing costs further this year, which might hold back the USD bulls from placing aggressive bets. Adding to this, diminishing odds for a Bank of Canada interest rate cut in June could support the CAD and also contribute to capping the USD/CAD pair.