Tomorrow’s US CPI release could lift the USD/CAD pair above the 1.26 level before markets turn their focus more clearly to the Bank of Canada’s policy decision on Wednesday, economists at Scotiabank report.

Additional CAD gains depend on the BoC signaling that it will again hike by 50bps 

“US inflation data could leave the USD/CAD at risk of a firmer break above 1.26 if the print triggers bets for three consecutive 50bps hikes by the Fed.”

“Given that the BoC is widely expected to hike by 50bps, and markets see a very aggressive tightening cycle, additional CAD gains depend on the BoC signaling that it will again hike by 50bps at one of its June or July meetings.”