Canadian Dollar Hits Two-Week High Amid Higher Inflation and Tariff Uncertainty

The Canadian dollar has reached its highest level in two weeks against the US dollar, trading at 1.3850 per US dollar or 72.20 US cents. This increase comes as inflation data shows a higher-than-expected rise to 3% in July.

Core measures of inflation, such as CPI-trim and CPI-median, were more subdued at 1.9% and 2%, respectively. Economists at Royal Bank of Canada noted that the report remains consistent with 'firming economic growth and underlying inflation close to target.'

The US is set to impose 50% tariffs on nearly $20 billion worth of Canadian goods starting August 19, which could have significant consequences for some affected industries and regions. However, RBC economists believe these measures are unlikely to derail the broader economic recovery.