USD/CAD clings to daily gains around 1.2470 as investors ignore Canada CPI data
- USD/CAD continues to trade in positive territory in early American session.
- Annual CPI in Canada came in lower than expected for February.
- US Dollar Index stays below 92.00 ahead of FOMC.
After trading in a tight range near 1.2450 during the first half of the day, the USD/CAD pair edged modestly higher in the early American session and was last seen gaining 0.22% on the day at 1.2470.
Soft Canadian inflation data fails to trigger a reaction
The data published by Statistics Canada revealed on Wednesday that the Consumer Price Index ticked up to 1.1% on a yearly basis in February but fell short of analysts' estimate of 1.3%. Additionally, the Bank of Canada's (BoC) Core Consumer Price Index declined to 1.2% from 1.6% in January, compared to the market expectation of 1.4%.
Nevertheless, the soft inflation figures don't seem to be having a significant impact on the CAD's performance against its rivals as investors remain on the sidelines before the FOMC publishes its Monetary Policy Statement and Economic Projections.
Meanwhile, the US Dollar Index is posting small daily gains around 91.90 with the US 10-year Treasury bond yield rising more than 2% on a daily basis.
Investors will pay close attention to the FOMC policymakers' long-term interest rate expectations. If the dot-plot points to an earlier-than-expected tightening in policy, the greenback could continue to outperform its rivals. However, FOMC Chairman Jerome Powell could downplay concerns over heightened inflation expectations and limit the DXY's upside during the press conference.
Federal Reserve Preview: Forecast from 19 major banks.
Technical levels to watch for