USD/CAD: Consolidates gains below 1.2120 ahead of US CPI data
- USD/CAD shows gains in the early European session.
- Risk-aversion amid Middle-East tensions lifts demand for USD.
- Investors keenly await US CPI data.
The USD/CAD pair possesses mild gains in the early European session. The pair opened at the daily lows and recovered swiftly toward the session’s high at 1.2132.
At the time of writing, the USD/CAD pair is trading at 1.2109, up 0.08% on the day.
The appreciative move in the dollar kept the USD/CAD buoyed on Tuesday, while escalating tensions in the Middle East spooked the market and investors rushed toward a safer US dollar.
In addition to that, elevated US Treasury yields also lift demand for the greenback. The pair benefited from the inflationary anxiety. The rising commodity prices and supply chain issues cemented the outlook for upcoming inflationary pressure. It is thought this would eventually lead the Fed to end its ultra-accommodative monetary policy.
On the other hand, the Canadian dollar weighed down on receding commodity prices in the recent pullback and negative Job data released on Friday. The American Petroleum Institute (API) revealed a fall in US crude inventories by 2.5 million barrels in the previous week. However, the gains were offset by OPEC and its members’ downward energy demand forecast for Q2 on rising coronavirus cases in Asia-Pacific. This, in turn, negatively affected the commodity linked loonie.
As for now, Investors turn their attention to the release of US Consumer Price Index (CPI) data as inflation readings remain the central theme for market participants.
USD/CAD Additional levels