On Tuesday, the Canadian dollar initially weakened against the US dollar after Statistics Canada data showed Canada’s annual inflation rate dipped to 2.8 percent in June. This marked the lowest inflation rate in over two years, harking back to the times of masks and lockdowns. The lower-than-anticipated inflation number provides some breathing room for the Bank of Canada and increases the likelihood of maintaining interest rates at its next meeting in September. Lower interest rates can reduce the appeal of a currency like the CAD to foreign investors.
However, the Canadian dollar quickly reversed its course and climbed back up against the US dollar following weaker-than-expected US Industrial Production and retail data. The Canadian dollar is currently trading at 1.3178.
Expect more volatile trading and data-driven fluctuations for the USD/CAD pairing throughout the rest of the week.
