CAD Surges as Inflation Accelerates Amid US Tariff Uncertainty

The Canadian dollar strengthened to a two-week high against its US counterpart on Monday due to accelerating inflation and rising bond yields. According to Economies.com, the Canadian dollar gained 0.2% to C$1.3850 per US dollar, equivalent to 72.20 US cents.

Canada's annual inflation rate accelerated to 3% in July, exceeding expectations of 2.9%, as gasoline prices rose amid renewed tensions between the United States and Iran.

RBC economists Nathan Janzen and Abbey Xu stated that 'the July data remain consistent with a relatively favorable combination of improving economic growth and underlying inflation stabilizing near target.'

However, the approaching US tariff deadline adds uncertainty, as Canada's 10-year government bond yield has risen by around 17 basis points over the past month, making it the largest increase among G7 bond yields excluding Japan.