USD/CAD bulls fail to keep pair above 1.2500 amid consolidative conditions

• USD/CAD has been choppy and at one point on Monday went above 1.2500, but only briefly.
• Consolidative trade is unsurprising ahead of key events out of the US and Canada later in the week.

USD/CAD is currently trading flat on the day, though has seen some modest volatility in the past few hours, with the pair dropping to fresh multi-year lows around 1.2440 shortly after the start of European trade and then, more recently, crossing above the 1.2500 level. As of right now, the pair is trading closer to 1.2475, around the midpoint of the day’s price action.

Driving the day

US dollar conditions are subdued this Monday; bond yields are easing back a little after last Friday’s big jump, stocks are mixed and so are commodities (precious and industrial metals are up, but energy is mostly down) – all indicative of caution ahead of key US risk events this week, including (most importantly) Tuesday’s US February Retail Sales data release and Wednesday’s FOMC rate decision.

Thus, the fact that USD/CAD has been choppy but fairly directionless is not particularly surprising. There are some events of note in Canada as well this week; Canadian February Housing Starts and January Manufacturing Sales have already been released on Monday, the former coming in bang in line with expectations (245.9K starts last month) and the latter coming in above expectations (sales were up 3.1% versus forecasts for 2.5%). Later in the week, Wednesday’s Consumer Price Inflation data release for the month of February will be closely scrutinised, as will New House Price Index numbers for February (released on Thursday) and Retail Sales numbers for January (released on Friday).