Post #15833

Canadian Tailwinds Are Starting to Fade USD/CAD is bouncing as CAD cools off. After briefly testing late-January 16-month highs, the pair is now holding the 1.3600 support zone — a level that’s been defended six times before. Canada’s inflation pulse softened. January CPI slowed to 2.3% and the BoC trimmed mean eased to 2.4%, helped by a 16.7% YoY drop in gasoline and cooling shelter inflation. That keeps the BoC comfortable at 2.25% and flattens the expected rate path, reducing CAD’s yield support. On top of that, oil is losing its bid as OPEC+ weighs bringing back supply in April, which pressures Canada’s terms-of-trade tailwind and takes some oxygen out of the loonie. Also, Iran’s prime minister said the U.S. and Iran have reached an understanding on the main principles, which has helped unwind some of the risk premium priced into oil. - Alan