USD/CAD edges up to 1.3660 with Iran, Fed’s Warsh on focus

The US Dollar (USD) shows marginal gains against the Canadian Dollar (CAD) on Tuesday, trimming losses after a six-day selloff. The USD/CAD pair has reached session highs right above 1.3660 but remains relatively close to the five-week lows of 1.3635 set the previous day.  

The CAD received an additional boost on Monday, as Canada’s Consumer Price Index (CPI) figures confirmed that inflationary levels accelerated in March, although not as much as the market expected. This gives the Bank of Canada (BoC) some leeway to keep interest rates steady while awaiting further data.

Mixed messages from the US-Iran peace talks

Markets remain relatively calm on Tuesday, awaiting further developments from the US-Iran peace talks. A report by the Wall Street Journal affirmed on Monday that Tehran will finally send a delegation to Pakistan after threatening to pull out from the peace process, following the seizure of an Iranian vessel by the US military in the Strait of Hormuz.

Reuters has cited an anonymous US official saying that “things are moving forward” and that US President Donald Trump might join the meeting in person or virtually if the parties reach a deal. Iran, however, has shown concern about US demands that are not ready to meet. Meanwhile, the two-week ceasefire ends on Wednesday, and the US president affirmed that it will not be extended.

The US economic calendar will also gather pace on Tuesday with the March Retail Sales. Consumption is expected to have increased 1.4%, following a 0.6% gain in February, although the control group, more relevant from the Gross Domestic Product (GDP) perspective, is seen slowing down to 0.2% from 0.5% in February.

A few hours later, the recently appointed Federal Reserve Chairman, Kevin Warsh, will face the confirmation hearing at the US Senate, with the central bank’s independence issue likely to be the main topic.