Canada: Annual CPI rises to 2.4% in May vs. 2.1% expected, CAD gathers strength

The data published by Statistics Canada today revealed that inflation, as measured by the Consumer Price Index (CPI), rose 2.4% on a yearly basis in May following April's 2% reading and came in above the market estimate of 2.1%. On a monthly basis, the CPI matched the previous reading with 0.4%. "The CPI increased amid a series of broad-based gains, including higher prices for food and durable goods, while consumers paid 3.7% less for gasoline compared with May 2018," Statistics Canada noted in its publication. 

Meanwhile, the core CPI, which excludes volatile food and energy prices and is published by the Bank of Canada (BOC), was 2.1% and 0.3% on a yearly and monthly basis, respectively, with both figures surpassing analysts' forecasts. 

With the initial reaction, the USD/CAD pair came under a renewed pressure and was last seen trading at 1.3340, losing 0.27% on a daily basis. Commenting on the market reaction to the inflation data, "CAD caught a bid and will fuel speculation that better days remain ahead. However, we require much improved activity data to confirm. In the short-term however, CAD may enjoy a better bid on the crosses (like EUR and AUD) than against the USD, where it trades a touch rich,” TD Securities analysts said.