• USD/CAD rebounds from intraday lows as the Canadian Dollar trims earlier gains following Canada’s inflation data.
• Canada’s headline CPI rises 2.2% YoY in November, missing market expectations.
• Traders now turn their focus to key US labor and inflation data later this week.

The Canadian Dollar (CAD) trims part of its earlier gains against the US Dollar (USD) on Monday as traders digest the latest inflation data from Canada. At the time of writing, USD/CAD is trading near 1.3761, rebounding modestly after touching an intraday low around 1.3747, as the softer headline inflation print tempers demand for the Loonie even as the Greenback remains under broad pressure.

Statistics Canada reported that the headline Consumer Price Index (CPI) rose 2.2% YoY in November, unchanged from October but below market expectations of 2.4%. On a monthly basis, CPI increased 0.1%, slowing from 0.2% in the previous month.

The Bank of Canada’s (BoC) preferred core measures delivered a nuanced signal. Core CPI held steady at 2.9% YoY in November, while on a monthly basis, core CPI fell 0.1%, reversing sharply from a 0.6% increase in October.

Overall, the latest inflation data shows prices running close to the Bank of Canada’s 2% target. The softer headline CPI and easing monthly core reading support the BoC’s decision to keep interest rates unchanged at last week’s meeting. Policymakers said the current policy setting is “about the right level,” citing inflation near target and signs of resilience in economic activity.

In the United States, the economic calendar remains light on Monday, with the New York Empire State Manufacturing Index for December showing a sharp slowdown. The index fell to -3.9 in December from 18.7, well below market forecasts of 10.6.

Looking ahead, the US economic calendar turns busy in the days ahead, with upcoming data likely to shape expectations around the Federal Reserve’s policy path into 2026. The focus this week is on the delayed October and November Nonfarm Payrolls (NFP) report, due on Tuesday, followed by the Consumer Price Index (CPI) release on Thursday.