USD / CAD - Canadian dollar going nowhere fast

- US/China tariff “framework” news supports equities.- US May inflation expected to rise to 2.5% from 2.3% y/y- US dollar opens little changed from yesterday.USDCAD: open 1.3682, overnight range 1.3665-1.3689, close 1.3674, WTI 65.67, Gold 3333.40The Canadian dollar traded uneventfully overnight with traders awaiting today’s US inflation data for direction. The Canadian dollar is underpinned by speculation of a Canada/US tariff announcement by Trump at the G-7 meeting next week. The odds of an announcement have risen following reports that the US and Mexico are close to announcing a deal on steel and aluminum tariffs. The rumour is that Mexico would have a tariff-free steel export quota and a 50% tariff on anything above the quota. China’s lead trade envoy, Li Chenggang, told reporters that “The two sides agreed in principle a framework for implementing the consensus.” US Commerce Secretary Howard Lutnik pretty much said the same thing. No meaningful details were released, and markets quickly turned their attention to today’s US inflation report.The US Court of Appeals ruled that the Trump-era “Liberation Day” tariffs will remain in place at least until July 31, when the court will hear further arguments. The tariffs are believed to be responsible for the expected uptick in inflation, with forecasts calling for headline CPI to climb to 2.5% from 2.3% and core CPI to edge up to 2.9% from 2.8% y/y. A hotter-than-expected number would reinforce the Fed’s steady rate stance, while a downside surprise would almost certainly provoke another round of Powell-bashing from Trump.Wall Street ended higher on renewed optimism around US-China trade developments, and that mood spilled into Asia following news of a vague “framework.” Hong Kong’s Hang Seng gained 0.84%, while Australia’s ASX 200 and Japan’s Topix saw modest advances. In early European trade, the DAX is up 0.34%, and the CAC 40 is ahead 0.37%. S&P 500 futures, however, are slightly weaker, down 0.17% ahead of the inflation release. Gold (XAUUSD) sits at $3,334.00, and the US 10-year yield is nudging up at 4.50% as of 6:00 a.m. EDT.EURUSD traded in a 1.1405–1.1446 range, buoyed by soft US dollar sentiment in the run-up to inflation data. The euro is also finding support from recent hawkish chatter out of the ECB following last week’s meeting. Markets are leaning toward a prolonged pause in ECB policy action until at least September.GBPUSD traded between 1.3465 and 1.3510, finding a floor in Europe near the April 10 trendline support around 1.3435. Looking ahead, GBPUSD upside could be limited as the BoE may make a dovish pivot on the back of cooling wage and price pressures.USDJPY moved higher in a 144.66 to 145.25 band, due to improved risk appetite and firmer US Treasury yields. Japan’s May PPI rose 3.2% y/y, missing forecasts for 3.5% and sharply lower than April’s 4.1%, limiting yen support.AUDUSD traded sideways in a 0.6498–0.6532 range. The modest improvement in US-China trade rhetoric didn’t translate into gains, as traders were unconvinced by the lack of substance in the “framework” announcement and preferred to wait on CPI data.Canada Building Permits are expected to rise 2.2%$ compared to a drop of 4.1% last month.