• The USD/CAD traded in the 1.3136 - 1.3184 range, setting a new low since September 2022.
• Canadian Core inflation is expected to fall to 3.9% YoY in May.
• Eyes on Jerome Powell’s speech at ECB’s forum on Wednesday.

The USD/CAD pair faced downward pressure as the US Dollar weakened, declining to a low of 1.3136, its lowest level since September 2022. Furthermore, the focus shifts to the release of Canadian inflation figures on Tuesday, which are expected to have decelerated in May. Moreover, investors await Jerome Powell's upcoming speech at the ECB's forum on Wednesday, which could provide further direction for the market.

Canadian inflation figures and Powell’s Speech to set short-term trajectory

On Tuesday, the Bank of Canada will release inflation figures for May, which are expected to show a deceleration. The headline inflation per the Consumer Price Index (CPI) is seen falling to 3.4% YoY while the Core measures to 3.9% YoY. The CPI measure is a key gauge of inflation for central banks, which tends to influence monetary policy decisions. Hot figures are usually associated with interest rate hikes. 

On the other hand, investors will look for clues in Wednesday’s speech by Jerome Powell in the ECB’s forum. The markets are eagerly trying to decipher the fact that Federal Open Market (FOMC) members as per the revised dot plots, are seeing an additional 50 basis points (bps) hike in 2023. In that sense, any hawkish surprise will give a boost to the US Dollar whose DXY index is currently trading with losses at the 102.78 area.

In addition, mid-tier economic data released on Tuesday, including Durable Goods data from May may have an impact on the Greenback’s price dynamics