• The Canadian Consumer Price Index is expected to lose further traction in August.
• The Bank of Canada has reduced its policy rate by 75 bps so far this year.
• The Canadian Dollar seems to have embarked on a consolidative phase.

Canada is set to release the latest inflation data on Tuesday, with Statistics Canada publishing the Consumer Price Index (CPI) figures for July. Projections indicate a continuation of disinflationary trends in both the headline and the core CPI.

In addition to the headline CPI data, the Bank of Canada (BoC) will release its core CPI, which excludes volatile items such as food and energy. In July, the BoC's core CPI showed a 0.3% gain from July and a 1.7% increase over the past year. Meanwhile, the headline CPI rose by 2.5% over the last 12 months, the lowest level in the last 40 months and 0.4% from a month earlier.

These figures are being closely watched, as they could affect the Canadian Dollar (CAD) in the near term via the Bank of Canada's monetary policy, particularly following the central bank's additional 25-basis-point cut to its policy rate earlier in the month, bringing it to 4.25%.

In the FX market, the Canadian Dollar remains sidelined below 1.3600, a region also coincident with the key 200-day SMA. The ongoing rangebound theme follows monthly peaks in the 1.3625-1.3620 band recorded on September 11.