April US CPI rose 3.8% year-over-year, the highest since May 2023, reinforcing Fed rate-hike expectations and supporting the USD.
The USD/CAD pair remains steady around 1.3695 in early Asian trading, as traders digest stronger-than-expected US inflation data. April’s Consumer Price Index climbed 0.6% month-over-month, pushing the annual rate to 3.8%, the highest since May 2023. Core CPI, excluding food and energy, rose 0.4% monthly and 2.8% annually.
The data strengthens expectations that the Federal Reserve will maintain elevated interest rates, bolstering the USD. Meanwhile, rising crude oil prices, driven by Middle East tensions, could support the CAD, given Canada’s status as a major oil exporter. Traders are also eyeing the upcoming US PPI report and a US-China presidential meeting later this week.
Market focus remains on geopolitical risks, including US-Iran tensions, which may further influence commodity-linked currencies like the CAD.