Canadian Dollar dives on risk-off markets with US CPI on tap
The Canadian Dollar (CAD) accelerates its decline against the US Dollar (USD) on Tuesday, with the USD/CAD pair rallying above 1.3700 and set to test its highest levels in nearly a month, at 1.3714. A sour market mood amid saber-rattling in the Middle East and investors cautiousness ahead of the US Consumer Price Index (CPI) release are buoying the USD across the board. Traders are on edge about the possibility of the resumption of hostilities between the US and Iran, which would complicate the reopening of the Strait of Hormuz even further. US President Donald Trump affirmed earlier on Tuesday that the ceasefire is on “life support,” and CNN reported comments from the presidents aides suggesting that the resumption of major combat operations is back on the table. CNN also stated that the peace process is unlikely to make significant progress ahead of the meeting between Trump and Chinese President Xi Jinping later this week. Later on the day, April‘s US Consumer Price Index is likely to provide some distraction from geopolitics. Consumer inflation is expected to have surged to a 3.7% year-on-year rate, from 3.3% in March, amid the energy shock from Iran’s war. The core CPI is seen advancing at a