- Annual CPI in Canada rises to 2.4% in May to surpass the market expectation.
- US Dollar Index fluctuates near 97.50 mark ahead of FOMC announcements.
- WTI erases EIA-inspired gains, trades below $54.
The USD/CAD pair came under fresh bearish pressure in the second half of the day after the data published from Canada showed that the inflation rose more than expected in May. After dropping to a 5-day low of 1.3335, the pair staged a modest rebound and was last seen trading at 1.3355, losing 0.15% on a daily basis.
Statistics Canada today reported that the Consumer Price Index (CPI) in May increased 2.4% on a yearly basis in May following April's 2% reading and surpassed the analysts' estimate of 2.1%. On a monthly basis, the CPI came in at 0.4% compared to the market expectation of 0.2% while the Bank of Canada's core CPI figures, which exclude volatile food and energy prices, rose to their highest level since 2012.
Commenting on the data, "Combined with better domestic growth prospects for later in the year, this suggests the central bank is unlikely to head for policy easing for now, although a lot depends on how trade tensions evolve over coming months," said ING analysts.
Meanwhile, after the weekly crude oil stock report published by the Energy Information Administration revealed a larger-than-expected draw in the U.S. crude oil inventories, the barrel of West Texas Intermediate jumped above $54 to provide an additional boost to the commodity-sensitive loonie. Nevertheless, WTI failed to preserve its momentum and returned below the $54 mark in the last hour.
On the other hand, the greenback stays relatively calm ahead of the critical FOMC announcements later in the session. Although the Fed is expected to keep the policy rate unchanged, markets will be paying close attention to the updated economic projections to see how many Committee members expect a rate cut before the end of the year. Furthermore, Chairman Powell's press conference and the Q&A session is likely to ramp up the market volatility. At the moment, the DXY is at 97.50, losing 0.15% on a daily basis.
Technical levels to watch for
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