Canadian Dollar underperforms ahead of inflation data for May
The Canadian Dollar (CAD) trades lower against its major currency peers during the European trading session on Monday, ahead of the Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT.
At press time, USD/CAD trades 0.16% higher to near 1.4180, the highest level seen in over a year.
Statistics Canada is expected to show that inflationary pressures grew at a faster pace of 3% Year-on-Year (YoY) against 2.8% in April. On a monthly basis, price pressures rose 0.7%, faster than the previous reading of 0.4%.
Signs of price pressures accelerating are unlikely to boost hawkish Bank of Canada (BoC) bets, as Governor Tiff Macklem said in the monetary policy conference last week, “We’ve [central bank] got the rate where we think it needs to be right now.” Macklem signaled that the core inflation has ticked down and the economy is facing a tough phase.
Meanwhile, the US Dollar (USD) trades higher amid expectations that the Federal Reserve (Fed) will hike interest rates at least two times this year. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 100.90.
According to the CME FedWatch tool, the odds of the Fed delivering at least two interest rate hikes this year is 58.5%, a significant acceleration from 17.1% seen a week ago.
This week, investors will pay close attention to the US Personal Consumption Expenditure Price Index (PCE) data for May, which will be released on Thursday.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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