USD/CAD consolidates below 1.2400 amid steady US dollar

• USD/CAD trades cautiously following the previous session’s gains on Tuesday.
• WTI retreats from $84.00 and is exerting pressure on the Canadian dollar. 
• Fed/ BoC rate hike bets, inflation, and higher commodity prices take the center stage.

The USD/CAD pair accumulates gains on Tuesday in the early Asian trading hours. The pair touched the 1.2400 mark in the US session. At the time of writing, USD/CAD is trading at 1.2383, up 0.03% for the day.

The appreciative move in the US dollar keeps USD/CAD higher.  The US Dollar Index (DXY), which measures the performance of the greenback against its six major rivals, trades at 93.81, up 0.21%. Investors anticipate Fed’s tapering while digesting delay in rate hike expectations. US corporate results remained strong despite inflation concerns, which helped the greenback in finding some traction.

Crude oil, a key Canadian export, retreated from fresh 7-year highs, which  pushed the loonie lower against the USD. In addition to that, a Reuters poll reported that the Bank of Canada (BoC) will raise interest rates as early as Q3, 2022, at least three months earlier than previously expected. The Market is  already pricing in the first hike as early as April.

As for now, traders are waiting for the US Housing Price Index, S&P/Case-Shiller Home Price Indices, and New Home Sales data to take fresh trading impetus.

USD/CAD additional levels