USD/CAD oscillates in a narrow range around the 1.3170 region amid renewed USD demand

• USD/CAD oscillates around the 1.3170–1.3160 region in a narrow trading band.
• The US Dollar gains ground despite the disappointing US housing data.
• EIA Crude Oil Stock Changes indicated lower demand for crude oil.

The USD/CAD pair is trading in a narrow range below the 1.32 area. The pair currently trades around 1.3165 in the early Asian session. The Canadian Dollar loses ground against the Greenback despite disappointing US housing data from the US Census Bureau.

The US Census Bureau released monthly data on Wednesday revealing that Housing Starts fell 8% monthly in June, following a 15.7% gain (revised from +21.7%) in May. This number was below the market consensus of a 7.2% increase. Meanwhile, Building permits declined 3.7% in June, following a 5.6% gain in May. The US Dollar Index (DXY), an index of the value of the Greenback relative to a basket of foreign currencies, has climbed to five-day highs despite the disappointing data. 

On the Canadian Dollar front, the Canadian Consumer Price Index (CPI) for June decreased to 2.8% YoY from 3.4% in May. This figure was below the market's prediction of 3%. The CPI rose 0.1% MoM against market estimates of a 0.3% gain. Additionally, the monthly Core CPI, excluding volatile food and energy costs, declined 0.1%, while the annual Core CPI fell to 3.2%, down from 3.7% in May.

The Canadian Dollar could get some support from the Bank of Canada's hawkish stance. However, the next meeting is due in September, and the BoC will have received further inflation and labor market data by then before determining the monetary policy. 

On Wednesday, the Energy Information Administration (EIA) reported that the EIA Crude Oil Stocks Change in the week ending July 14 was -0.708M, compared to expectations of 2.44M and a gain of 5.946M the previous week. This figure indicated lower demand for crude oil and dragged the oil price lower following the release of the data.

Looking ahead, the Canadian Retail Sales m/m will be keenly watched. Also, the Unemployment Claims and Philadelphia Fed Manufacturing Index will be due later this week.