The Canadian dollar (CAD) has been trading stronger since the last Bank of Canada (BoC) rate cut, but the CPI data coming Tuesday may give it a turn, ING’s FX Strategist Francesco Pesole notes.

Canada’s CPI data comes forth

“Canada publishes CPI data for May on Tuesday, and we expect another inflation slowdown in line with consensus expectations. Headline CPI is seen decelerating from 2.7% to 2.6% year-on-year and the core inflation metrics may also keep inching lower.”

“This is the second big piece of Canadian data since the Bank of Canada (BoC) cut rates on 5 June. Earlier this month, jobs data showed a slowdown in hiring in May, with unemployment ticking higher and full-time employment dropping.” 

“The Canadian dollar (CAD) has been trading gradually stronger since the June cut, largely on the back of generally supportive sentiment, higher oil prices and distance from the EU political turmoil. Still, as we expect three more rate cuts by the BoC this year, we continue to expect the Loonie to be a laggard in the pro-cyclical space this summer.”