FX.co ★ Canadian Dollar Steady After Inflation Data

The Canadian dollar stabilized around 1.37 per USD, having pulled back from its eight-month high of 1.357 observed on June 16th. This stabilization followed steady Canadian inflation data, which influenced shifts in monetary policy expectations, thereby supporting the loonie. According to Statistics Canada's report for May, the Consumer Price Index (CPI) remained at 1.7% year-on-year, which was below the Bank of Canada's target of 2% for the second month in a row. However, the Bank of Canada's trimmed-mean measure stayed elevated at 3%, leading markets to adjust the expected pace of interest rate cuts. Concurrently, the US dollar weakened due to diminished Middle East risk premia after Tehran's limited strike on a Qatar base, which did not affect tanker traffic through the Strait of Hormuz. Additionally, positive export data and progress in US-Canada trade negotiations bolstered cross-border capital flows, keeping the loonie stable at its current levels.