USD/CAD retreats from fresh daily highs near 1.2650 ahead of Canadian inflation data

• USD/CAD consolidates gains on Wednesday in the initial Asian trading hours.
• US Dollar Index continues to edge higher beyond 93.00 on risk aversion amid delta variant spread.
• The Canadian dollar remains pressurized on falling commodity prices, unexpected election call, inflation data eyed.

USD/CAD remains muted in the initial Asian trading hour on Wednesday. After testing the high near 1.2650 in the overnight session, the pair consolidates with minute losses.

At the time of writing, USD/CAD is trading at 1.2626, down 0.04% for the day.

The US Dollar Index (DXY), which tracks the performance of the greenback against the six major currencies remains strong above 93.00, with 0.57% gains, despite weaker-than-expected US Retails Sales data. 

The US Retail Trade fell 1.1% in July, much higher than the market estimates of the 0.3% drop, whereas Industrial Production jumped 0.9% in July, against the market expectations of 0.5%.

Persistent coronavirus jitters and mixed economic data took a toll on investors sentiment and hurt the demand for riskier assets.

On the other hand, the Canadian dollar offers no attractive opportunities for traders on weaker commodity prices and downbeat economic data.

Oil prices continued to decline for the fourth consecutive day below $67.00 on demand concerns. The Canadian New Housing Starts dropped 3.2% in July, at 272K units, missing expectations of a 275K expansion.

As for now, traders are waiting for the Canadian Inflation Rate, and US Housing Starts data to trade fresh trading impetus.

USD/CAD additional levels