USD/CAD crawls higher, approaches 1.3800 ahead of the US CPI release

• The US Dollar remains firm with all eyes on US consumer inflation figures.
• The Canadian Dollar struggles with Oil prices near two-month lows.
• US inflation is expected to have accelerated in July, which might dent hopes of immediate Fed easing.
  

The Canadian Dollar remains on its back foot against a slightly firmer US Dollar, weighed by the low Oil, which keeps the USD/CAD pair on track for a four-day winning streak, with all eyes on the US CPI report

Investors remain wary of selling US Dollars ahead of the release of July's US inflation figures. The market consensus points to a moderate increase in inflationary pressures, which might dampen hopes of a September rate cut triggered by the weak US employment figures and dovish comments by Fed officials.

US Inflation data might curb hopes of Fed easing

The headline inflation is expected to have accelerated to a 2.8% year-on-year rate in July, from 2.5% in June and 2.4% in May, while the core inflation is seen at 3%, its highest rate since February.

The market remains wary of a larger-than-expected increase in inflation, which would confirm that the impact of tariffs has filtered through consumer prices, and might prompt Fed doves to reconsider their views. The risk is skewed to the upside for the US Dollar.

The Canadian Dollar, on the other hand, is struggling with Oil prices pinned near two-month lows, and the weak employment data seen on Friday that puts pressure on the Bank of Canada to ease interest rates further over the coming months.