Canada's CPI unchanged at 1.7%, Canadian dollar edges higher

[Redator]

The Canadian dollar has posted slight gains on Wednesday. In the North American session, USD/CAD is trading at 1.3735, up 0.08% on the day.

Canada's CPI, remains steady in May

Canada's inflation rate held steady in May. Headline CPI was unchanged at 1.7% and the average of two key core CPI indicators inched lower to 3.0% from 3.05%.

Monthly, CPI rose 0.6% in May, up from -0.1% in April and above the market estimate of 0.5%. This was the highest level in three months.

The Bank of Canada last cut interest rates in March and has been in a wait-and-see mode over concerns that US tariffs will boost inflation. That hasn't happened, although it's entirely possible that tariff impact on inflation will be felt in the coming months. The BoC meets next on July 30.

Governor Macklem has described the inflation picture as "complicated". Bank policymakers will get a look at the June inflation report next month, which will likely be a key factor in the Bank's rate decision.

Powell remains cautious

Federal Reserve Chair Powell testified before a House Committee on Tuesday and had a cautious message for lawmakers. Powell said that the Fed was committed to keeping inflation contained and that the Fed planned to maintain rates until the impact of tariffs on inflation was more clear and reiterated that inflation still remained above the Fed's 2% target.

Powell has faced sharp criticism from President Trump for not lowering rates but the Fed Chair has stuck to his guns and maintained rates. In his testimony on Tuesday, Powell said that Trump's attacks were "having no effects" on the Fed's rate policy.

USD/CAD Technical

• USD/CAD pushed above resistance at 1.3726 and is testing resistance at 1.3737. Above, there is resistance at 1.3750
• 1.3713 and 1.3702 are the next support levels

USDCAD 4-Hour Chart, June 25, 2025

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