• The Canadian consumer price is expected to stay at a constant level of 2.6% in March.
• The Canadian Bank will announce its decision on monetary policy on Wednesday.
• The Canadian Dollar retains its strength in relation to the American rival, lower falls.

Statistics Canada will publish the March Consumer Index (CPI) price on Tuesday. It is expected that annual inflation will be maintained at a constant level of 2.6%, corresponding to the February reading. Market players provide for a monthly advance payment of 0.7%, soothing from the previous 1.1%. At the same time, Bank of Canada (BOC) will issue its own basic CPI estimates, which measure basic inflation by cutting unstable food and energy prices. According to the latest version, Core Boc CPI increased by 0.7% Mom and 2.7% in February.

The data is relevant before the monetary policy is announced on Wednesday. The central bank is widely expected to maintain a rate of interest rate at 2.75%. Officials cut it when they met on March 12, seventh in a row of cutting, leaving the main rate at the lowest level from 2022.

The expected enhance in inflation is more disturbing than what decision -makers can see. The decision of the President of the United States (USA) Donald Trump on the imposition of tariffs on almost all trading partners took its toll. In Trump’s announcement, Canada is accused of 25% of export fees to the USA.

Before announcing, the USD/CAD pair trads near the multi -level lowest level published earlier in April at 1.3827.

What can we expect from the foot of Canada inflation?

BOC officials are well aware of the risk of trading war and its potential impact on the local economy. The slowdown of growth and higher inflation pressure are the heart of fears, not only in Canada.

Decision -makers also expected volatile levels of inflation among tariffs, but they expected that it would remain almost 2% compared to the projection horizon. Would they maintain such a view? This is something that can not be seen after the CPI report is issued.

Officials also stated that the decision of the White House to impose huge tariffs “became the main source of uncertainty.” And that’s not the only one. Investors are not sure what BOC will do this week. Although there is a stern consensus indicating the decision to work, there is a vast proportion of analysts who predict another reduction in interest rates of 25 BPS.

The rate reduction can be in the table if the numbers of CPI are below expectations. On the other hand, the enhance in rates seems unlikely at this time, but the higher numbers than expected should lead to speculation that the reductions of the rates ended in the near future. Changing Jastrzębie can lead to a stronger Canadian dollar (CAD), although investors can shoot during the CPI issue before confirmation of BOC the day later.

In addition, it is worth noting that increased fears from recession may force BOC to limit interest rates, even if inflationary pressure increases by more than expected in March.

As it was said, uncertainty is high among all market participants. With this in mind, the reaction to the release of data can be miniature -lived and quickly overshadowed with fresh headers associated with the tariff.

When is CPI canada due and how can it affect USD/CAD?

The report on the Canadian march will be published on Tuesday at 12:30 GMT, and market participants expect price pressure to remain widely unchanged from February. As usual, the discrepancy between market expectations and actual numbers will be responsible for the reaction of CAD.

In general, numbers higher than expected suggest that BOC may require a more hawk to be accepted, and therefore push the cad higher and other rivals. The opposite scenario is also critical, with a softer than expected lectures suggesting that BOC can continue the adjacent rates. At the same time, however, rapid acceleration of price pressure can cause concerns about Canadian economic health, and thus weigh CAD.

Valeria Bednarik, the main analyst at FxStreet, notes: “Before being announced, the Canadian dollar consolidates profits due to a battered American dollar (USD). Capor for the USD/CAD pair shows that the technical indicators have lost the momentum at the level of sale, but there are no immediate signs of exhaustion down. SMA, both above the current level.

Bednarik adds: “USD/CAD is stopped before the first level events, but the technical risk remains distorted to the minus. A monthly one at 1.3827 is an immediate support before the region 1.3470. Profits in the direction of 1.4000 will probably attract sales interest.”