The Canadian dollar has steadied against the U.S. currency following the release of data that showed inflation in Canada rose in May, tempering expectations for an interest rate cut in July.
Futures traders have now priced in a less than 50% chance that the Bank of Canada will further lower interest rates at its next policy meeting on July 24.
The revised outlook comes after Canada's annual inflation rate unexpectedly rose to 2.9% in May from 2.7% in April.
Core inflation that excludes volatile food and energy prices increased in May for the first time in nearly six months.
Traders are now placing the odds of a July interest rate cut at 45%. That’s down from 65% before the May inflation report.
The Canadian dollar was unchanged at 73.26 U.S. after the May inflation report was released by Statistics Canada.
The Canadian dollar was the only major currency other than the British pound not to lose ground against the U.S. dollar during the June 25 trading session.
Earlier in June, the Bank of Canada became the first central bank among the Group of Seven leading industrialized nations to lower interest rates.
The Bank of Canada reduced its benchmark overnight interest rate by 25 basis points to 4.75%. Markets don’t expect another rate cut in Canada until at least September of this year.
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