Canada’s July CPI rose 3.0% YoY, exceeding forecasts and boosting the CAD amid softer USD demand.
USD/CAD fell to 1.3852, its lowest since June 3, as Canadian inflation data surpassed expectations. July’s Consumer Price Index rose 3.0% year-over-year, above the 2.9% forecast and up from 2.8% in June. Monthly CPI increased 0.5%, reversing a prior decline.
Core inflation also climbed, with the Bank of Canada’s preferred measure rising 2.3% YoY. Gasoline and travel tours drove the headline increase, while geopolitical tensions added upward pressure on fuel prices. Despite the rise, core measures remained near the BoC’s 2% target.
The BoC is expected to hold rates at 2.25% in its September 2 decision. Meanwhile, the USD weakened as Fed rate hike bets eased following softer US economic data.