Canadian dollar edges lower as core inflation slides

The Canadian dollar has edged lower on Tuesday. USD/CAD is up 0.24%, trading at 1.3655 in the North American session at the time of writing.

Canada’s inflation rate sinks to 1.6%

Canada’s headline inflation continued to fall in April, dropping to 2.7% y/y, down from 2.9% in March and matching the market estimate. Monthly, the headline figure dropped to 0.5%, down from 0.6% in March and matching the market estimate. The decline in inflation was led by slower growth of food prices.

The big news was core CPI, which dropped sharply in April, falling to just 1.6% y/y. This was down from 2% in March and marked the lowest level in three years. Monthly,  core CPI dropped to 0.2%, down from 0.5% in March and below the market estimate of 0.4%.

The Bank of Canada, which meets on June 5th, will no doubt be pleased with the inflation release. The BoC has hinted that it is moving closer to a rate cut, but Bank policy makers want to see evidence that the downturn in inflation will remain sustainable and inflation will not rebound after a rate cut. The BoC is expected to start cutting rates at the June or July meetings.

The Federal Reserve continues to remains cautious about rate cuts. On Monday, Fed Vice Chair Philip Jefferson said that it was too early to tell if the downtrend in inflation would be “long lasting”. Fed Vice Chair of Supervision Michael Barr said that first-quarter inflation data was disappointing and was not supportive of easing monetary policy. For a second straight day, there are no US economic releases and we’ll hear from a host of FOMC members, which could provide insights about the Fed’s rate policy plans.

USD/CAD Technical

  • USD/CAD pushed past resistance at 1.3631 and 1.3673 earlier. Above, there is resistance at 1,3733
  • 1.3571 and 1.3529 are providing support

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.