Canadian Dollar Weakens Against Majors

The Canadian dollar dropped against its major counterparts in the New York session on Tuesday, as investors looked ahead to crucial U.S. inflation data, the minutes of the Fed's March policy meeting and the ECB rate decision for directional cues.

The U.S. Labour Department is scheduled to release its reports on consumer and producer inflation for March on Wednesday and Thursday, respectively.

Doubts crept in about a possible Fed rate cut this year after Lorie Logan, president of the Federal Reserve Bank of Dallas, warned that it's premature to consider lowering interest rates.

Fed Governor Michelle Bowman also echoed concerns about potential upside risks to inflation, while Chicago Fed President Austan Goolsbee said the U.S. central bank must weigh how long it can maintain the policy restrictive without damaging the economy.

Minneapolis counterpart Neel Kashkari said the Fed cannot 'stop short' on the inflation fight as oil prices creep higher.

However, former Federal Reserve Bank of St. Louis President James Bullard said in an interview with Bloomberg TV that he's expecting three interest-rate cuts this year and that's the base case.

According to CME Group data, the prospect of a first 25 basis point cut in June currently stands at 49 percent, down from 57 percent a week ago.

The loonie weakened to 1.3598 against the greenback and 111.47 against the yen, from an early 4-day high of 1.3547 and a 5-day high of 111.98, respectively. The currency may locate support around 1.38 against the greenback and 108.00 against the yen.

The loonie fell to more than a 3-month low of 0.9007 against the aussie and near a 3-week low of 1.4764 against the euro, off its early highs of 0.8960 and 1.4727, respectively. The currency is seen finding support around 0.92 against the aussie and 1.49 against the euro.