Canadian Dollar underperforms ahead of inflation data for May

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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.

The Canadian Dollar faces selling pressure against its major peers in the countdown to the inflation data for May.
BoC’s Macklem said last week that interest rates are at the right place where they should be.
The Fed is expected to deliver at least two interest rate hikes this year.

Canadian Dollar Price Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.17%	-0.03%	0.26%	0.16%	0.12%	0.20%	0.13%
EUR	-0.17%		-0.21%	0.09%	-0.02%	-0.00%	0.05%	-0.03%
GBP	0.03%	0.21%		0.28%	0.22%	0.18%	0.24%	0.17%
JPY	-0.26%	-0.09%	-0.28%		-0.09%	-0.12%	-0.06%	-0.09%
CAD	-0.16%	0.02%	-0.22%	0.09%		-0.05%	0.02%	-0.01%
AUD	-0.12%	0.00%	-0.18%	0.12%	0.05%		0.08%	0.02%
NZD	-0.20%	-0.05%	-0.24%	0.06%	-0.02%	-0.08%		-0.05%
CHF	-0.13%	0.03%	-0.17%	0.09%	0.00%	-0.02%	0.05%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

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.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by Statistics Canada on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.