USD/CAD attracts some sellers below the 1.3500 mark ahead of Canadian CPI data

• USD/CAD loses ground near 1.3480, adding 0.02% on the day. 
• The US Producer Price Index (PPI) climbed 0.3% MoM in January from a 0.1% decline, the biggest move since August. 
• The rise in oil prices might boost the Canadian Dollar and create a headwind for USD/CAD.

The USD/CAD pair trades on a weaker note below 1.3500 during the early Asian session on Monday. US and Canadian markets are closed on Monday due to the President’s Day holiday and Family Day, respectively. Investors will take more cues from the Canadian Consumer Price Index (CPI) for January, which is estimated to ease to 3.2% YoY from 3.4% in December. USD/CAD currently trades around 1.3480, gaining 0.02% on the day. 

The US Producer Price Index (PPI) climbed 0.3% MoM in January from a 0.1% decline, the biggest move since August. The core PPI, excluding food and energy, rose 0.5% MoM in January, also against expectations for a 0.1% gain. On an annual basis, the headline PPI rose 0.9% YoY, while the Core PPI climbed 2.0% from 1.7% in the previous reading, the Bureau of Labor Statistics, Department of Labor reported on Friday. The hotter-than-expected report highlights the sticky nature of inflation and might convince the Federal Reserve (Fed) to delay, cutting the interest rate. 

On the Loonie front, the Bank of Canada (BoC) deputy governor Toni Gravelle said last March that policymakers expected to wind up quantitative tightening in late 2024 or early 2025. However, short-term traders have prompted speculation that the acceleration of this trend is imminent. Meanwhile, the rise in oil prices might boost the Canadian Dollar and cap the upside of the pair, as Canada is the largest oil exporter to the United States.

The markets will closely watch the Canadian Consumer Price Index (PPI). Later this week, the FOMC Minutes will be due on Wednesday and Canada’s Retail Sales will be due on Thursday.