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Canadian dollar weakens after softer inflation boosts USD/CAD

USD/CAD rebounded toward 1.4060 as Canada’s June CPI fell 0.4% month over month and annual inflation eased to 2.8%.

Reported · Written up by our desk · Major Pairs

USD/CAD rose on Monday, moving back toward the 1.4060 area after trading below 1.4000 earlier, as the Canadian dollar weakened following softer-than-expected Canadian inflation data. FXStreet noted the US Dollar Index was also higher by about 0.2% near 101.00, adding support for the pair.

Canada’s June Consumer Price Index declined 0.4% month over month versus expectations for a 0.2% decline, after a prior 1.0% increase. Annual inflation slowed to 2.8% from 3.2%, while core inflation (Bank of Canada Core CPI) fell to 0.2% month over month from 0.6%, reinforcing views that the Bank of Canada may not need to raise rates again.

FXStreet said the Canadian dollar had limited support from crude oil, even as West Texas Intermediate traded more than 1% higher near $83.50 per barrel. The report also pointed to cautious market sentiment as the US dollar benefits, citing wider attacks between the United States and Iran and rising concerns around Gulf shipping routes.

Looking ahead, investors will monitor the US ADP Employment Change four-week average, with the prior reading at 19.75K. FXStreet added that a slowdown in private-sector hiring could curb USD/CAD’s advance, while a stronger figure could support Treasury yields and help the pair extend its recovery.

Latest closeWTI crude $79.00 ▼0.8%|Dollar index 100.71 ▲0.2%

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