• Annual Core CPI in Canada decelerates to 6.3% in December.
• USD/CAD holds around 1.3400 after Canadian inflation figures.

Inflation in Canada, as measured by the Consumer Price Index (CPI), decelerated from 6.8% in November to 6.3% in December, matching consensus estimates. On a monthly basis, the CPI fell by 0.6% as compared to the 0.1% decline expected and the previous month's flat reading.

Additionally, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, fell 0.3% MoM and unexpectedly eased to 5.4% on a yearly basis.

Market reaction

The USD/CAD pair moves little in reaction to the key macro data and remains confined in a narrow trading band, around the 1.3400 round-figure mark.