• Inflation in Canada rose at a stronger pace than expected in May.
• USD/CAD continues to trade in positive territory above 1.2950.

The data published by Statistics Canada showed on Wednesday that annual inflation in Canada, as measured by the Consumer Price Index (CPI), climbed to its highest level in 39 years at 7.7% in May from 6.8% in April. This print came in higher than the market expectation of 7.4%. On a monthly basis, the CPI arrives at 1.4%, compared to analysts' estimate of 1%.

Meanwhile, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, rose to 6.1% on a yearly basis from 5.7%, surpassing the market forecast of 5.9%.

Market reaction

USD/CAD's reaction to these data was surprisingly muted. As of writing, the pair was trading at 1.2980, where it was up 0.48% on a daily basis.