As broadly anticipated, majority of the inflation metrics in Canada’s July CPI report mirrored cooling value pressures for the month.

Whereas the headline CPI confirmed a 0.4% month-on-month rebound as anticipated, the annual studying slipped from a 2.7% year-over-year enhance in June to only 2.5% in July – its lowest studying since March 2021.

The core CPI mirrored a 0.3% month-to-month uptick, however annual core inflation dipped from 1.9% to 1.7% as a substitute of holding regular. Different inflation-related metrics such because the trimmed CPI and median CPI additionally indicated softer year-on-year features:

• Headline month-to-month CPI: 0.4% (0.4% anticipated, -0.1% earlier)
• Headline annual CPI: 2.5% (2.7% anticipated, 2.7% earlier)
• Core month-to-month CPI: 0.3% (0.1% anticipated, -0.1% earlier)
• Core annual CPI: 1.7% (1.9% anticipated, 1.7% earlier)
• Trimmed CPI: 2.7% y/y (2.8% anticipated, earlier studying downgraded from 2.9% to 2.8%)
• Median CPI: 2.4% y/y (2.5% anticipated, 2.6% earlier)
• Frequent CPI: 2.2% y/y (2.2% anticipated, 2.2% earlier)

Hyperlink to Canada’s Client Value Index Report (July 2024)

Elements of the report revealed that the decline in general inflation was broad-based, led by decrease costs for journey excursions, passenger autos and electrical energy.

Market Reactions

Canadian Greenback vs. Main Currencies: 5-min

Overlay of CAD vs. Main Currencies Chart by TradingView

The Loonie, which had largely been cruising sideways forward of the Canadian CPI launch, turned decrease upon seeing the year-on-year readings come within the crimson.

It continued to edge decrease, most notably in opposition to the lower-yielding yen and franc, as risk-off flows had been in play, earlier than leveling off in opposition to the remainder of its counterparts round a few hours after the report. CAD remained on wobbly footing in opposition to its fellow commodity currencies for the rest of the session however managed to maintain its head above water versus the greenback.