Canadian inflation data missed forecasts in April, but rising oil prices supported the CAD against the EUR.
The Canadian Dollar strengthened against the Euro on Tuesday, with EUR/CAD dropping to near 1.5970, its lowest level in two weeks. The move came despite softer-than-expected Canadian inflation data, as rising oil prices linked to US-Iran tensions bolstered the commodity-linked currency.
Canada’s Consumer Price Index rose 0.4% month-over-month in April, below the 0.6% forecast and down from March’s 0.9% gain. Annual CPI accelerated to 2.8% from 2.4% but remained below the 3.1% consensus. The Bank of Canada’s core CPI eased to 2.1% year-over-year, signaling energy-driven inflation has yet to spread broadly.
Markets now await Eurozone inflation data on Wednesday, which could influence the European Central Bank’s policy outlook. Economists expect core HICP to hold steady, but surprises may shift expectations for rate cuts or hikes.