Canadian Dollar Falls as Inflation Surpasses Forecasts, Eyes on US-Iran Conflict
The Canadian dollar depreciated marginally by 0.02% against the US dollar to trade at 1.3875 after data released by Statistics Canada showed that the country's headline annual inflation rate accelerated from 2.8% in June to 3.0% in July, surpassing analysts' expectations of 2.9%. This increase was primarily explained by a rise in gasoline prices, which increased by 25.7%, up from the previous reading of 20.5%. Meanwhile, the core inflation rate, which excludes energy and unprocessed food, advanced from 2.1% to 2.3% over the same period.
Although this acceleration remains within the Bank of Canada's 1-3% target range, market participants are now focused on the ongoing US-Iran conflict in the Middle East, which could exert upward pressure on inflation levels should energy supply disruptions persist.
Technical analysis of the USD/CAD pair indicates a short-term bearish performance over recent weeks. However, the price is currently respecting and rejecting its 200-day simple moving average (SMA), maintaining an underlying bullish bias.