By Will Peters

The Canadian dollar (CAD) is witnessing thin volumes against the US dollar on Tuesday; understandable considering we are coming off a long weekend in the US and Canada.

The Canadian dollar is mixed to lower on Tuesday:

The pound sterling to Canadian dollar exchange rate (GBP/CAD) is unchanged at 1.8329.The euro to Canadian dollar rate (EUR/CAD) is 0.34 pct higher at 1.5082.The US dollar to Canadian dollar exchange rate (USD/CAD) is 0.04 pct higher at 1.0970.Note: All CAD quotes here refer to the wholesale spot market. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.

Pound sterling softer vs CAD

The Canadian dollar’s competitiveness has kept it trading range bound, although things seem to be moving in the currency’s favour over the past few hours.

Today's inflation data will certainly be behind moves lower in the GPB/CAD today.

"With the Canadian dollar in full control, the only way is downwards for GBP/CAD. We expect some trading around the 1.8230 level," says a rather bearish assessment on GBP's outlook issued by Sasha Nugent at Caxton FX.

We would be cautious to call GBP/CAD ahead of tomorrow's BoE minutes release and employment data.

Outlook for CAD vs USD

Concerning the outlook for the US dollar vs Canadian dollar exchange rate, analyst Shaun Osborne at TD Securities says, "we still think USDCAD retains a corrective bias but the focus will soon start to shift to the key domestic data releases we have looking on the near horizon and these results will likely give the CAD some renewed sense of momentum and direction."

Osborne remains bearish on the Canadian currency saying his bank believes the Canadian retail sales and CPI data this coming Friday will provide the grounds for a renewed drop in the CAD.

"We expect weak headline retail sales data (admittedly a reflection of the Ontario ice storm that hit in December) but we also see no reason to expect weak inflation impulses to have improved in January—we look for similar readings for both the core and headline readings to December’s 1.3% and 1.2% outcomes respectively. Low inflation—with price growth stuck at the low end of the BoC’s target range—is a prime concern for BoC Governor Poloz so persistently soft data will increase expectations that the dovish policy message (at the very least) will be reinforced at the March 5th BoC FAD," says Osborne.

Minimum upside should see USD/CAD to 1.1910

A technical outlook note from Luc Luyet at MIG Bank says the longer-term picture continues to favour the USD:

"USD/CAD is trying to form a short-term base near the support at 1.0954. A break of the hourly resistance at 1.0999 (17/02/2014 high) is needed to negate the short-term bearish trend. Other resistances can be found at 1.1026 and 1.1091 (11/02/2014 high), whereas another support lies at 1.0843.

"In the longer term, the decisive break of the major resistance at 1.0870 validates a multi-year basing formation whose minimum upside potential is around 1.1910. A first resistance is given by the 50% retracement of the decline from the September 2009 peak at 1.3065 (around 1.1236)."