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AUD/CAD nears parity as hot Australian CPI meets Canada tariff response
AUD/CAD rallied in Asian trading, supported by a rise in Australian trimmed mean CPI to 3.6% y/y and Canada’s plan for C$27.6bn of dollar-for-dollar US counter-tariffs from Sept. 8.
AUD/CAD is moving toward parity as a hotter Australian inflation read and Canada’s specified tariff retaliation against the US reinforce the same cross trade, according to Action Forex. The pair surged during Asian trading and is now closing in on 1:1.
Australia’s headline CPI eased to 3.5% y/y in July from 3.8%, but the report’s policy relevance centered on underlying inflation. Trimmed Mean CPI held at 3.6% y/y versus 3.5% consensus, monthly underlying inflation accelerated from 0.3% to 0.5%, and services inflation rose from 3.5% to 3.7%, while goods inflation eased.
Action Forex added that the minutes from the Aug. 10 to 11 RBA meeting showed the board discussed whether it could need to tighten pre-emptively if upside inflation risks crystallized, with monthly data flagged as an input before the next decision. With the July CPI as the only monthly inflation report available before the Sept. 28 to 29 meeting, the inflation mix strengthened the case that September tightening stays plausible rather than being deferred to later quarterly data.
On the Canada side, the outlet said Ottawa is deepening its tariff confrontation with the US after the collapse of trade talks. Canada has specified dollar-for-dollar counter-tariffs on about C$27.6bn of US products from Sept. 8, paired with a C$7.5bn domestic support package for affected workers and businesses, while Action Forex noted the impacted trade amounts to roughly 5% of Canada’s exports.