June inflation in Canada came in at 2.7%. While the inflation figure is high historically, it is near consensus expectations and unlikely to impact the course of monetary policy in Canada. As such, the release did not cause much change to the Canadian dollar exchange rate. USD to CAD is currently at 1.258 (CAD to USD at 0.795), nearly unchanged from yesterday and within the range in which it has been trading for the last several days. The relative calm in exchange rates will likely end after 2 pm today when we hear from the US Federal Reserve on its plans for monetary policy. We have already noted the importance of this month’s meeting here. The key question is whether the spreading coronavirus delta variant will make the central bank sound more cautious on its economic outlook and therefore less willing to rein in monetary stimulus. Stocks are also waiting on signals from the Fed and are flattish this morning. Oil is up slightly seeming stabilizing at a level below but near its recent highs.
