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Canada CPI preview points to firmer inflation, likely weighing on CAD
Economists expect headline CPI to rise 2.9% year over year in July, with core CPI seen at 2.2%, after June cooled to 2.6% on the bank’s broader measures.
FXStreet previews Canada’s July inflation release scheduled for Monday, highlighting what the data could mean for Bank of Canada policy and the Canadian dollar.
The report notes that the BoC held its policy rate steady at 2.25% on July 15, and it says markets will be watching whether inflation reaccelerates after June’s easing. Economists forecast headline CPI at 2.9% year over year for July, up from June’s 2.8%, while prices are expected to rise 0.7% month over month.
The preview also points to core inflation, with the core measure seen increasing to 2.2% year over year, higher than June’s 2.1% reading. It adds that the bank will monitor CPI-Common, trimmed mean, and median measures, which fell to 2.6%, 1.8%, and 1.9% respectively in June.
FXStreet ties the inflation outlook to oil price dynamics and the potential pass through from US tariffs, and it says recent market pricing looks for just over 18 basis points of additional tightening by year end. On the currency, the outlet notes USD/CAD has been in a steady downtrend since late July, and it recently broke below 1.3900, its first move under that level since early June.