--- title: "ATFX: Canada's June CPI annual rate fell to 2.8%, USDCAD rebounded significantly" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/42825778.md" description: "ATFX Market Review: According to data released yesterday by Statistics Canada, Canada's June CPI year-on-year rate fell from 4.2% to 2.8%, a decrease of 0.4 percentage points. The year-on-year increase in gasoline prices in June slowed compared to May, driving the overall decline in CPI. Canada's June core CPI year-on-year rate dropped from 2.2% to 2.1%, a decrease of 0.1 percentage points. Both core CPI figures declined, reducing high inflation risks, which may impact the Bank of Canada's monetary policy path for the second half of the year. Additionally..." datetime: "2026-07-21T10:39:34.000Z" locales: - [en](https://longbridge.com/en/topics/42825778.md) - [zh-CN](https://longbridge.com/zh-CN/topics/42825778.md) - [zh-HK](https://longbridge.com/zh-HK/topics/42825778.md) author: "[交易员说](https://longbridge.com/en/profiles/25527811.md)" --- # ATFX: Canada's June CPI annual rate fell to 2.8%, USDCAD rebounded significantly ATFX Market Review: According to data released yesterday by Statistics Canada, Canada's June CPI year-on-year rate fell from 4.2% to 2.8%, a decrease of 0.4 percentage points. The year-on-year increase in gasoline prices in June slowed compared to May, driving the overall decline in CPI. Canada's June core CPI year-on-year rate fell from 2.2% to 2.1%, a decrease of 0.1 percentage points. Both core CPI figures declined, reducing high inflation risks, which may impact the Bank of Canada's monetary policy path for the second half of the year. Additionally, the June CPI decreased by 0.4% month-on-month, marking the largest monthly drop since December 2024. Figure 1, Screenshot of Canada Inflation Report List - ATFX According to the report released by Statistics Canada, they believe that the decline in international energy prices following the signing of a memorandum of understanding between the United States and Iran in June was an important factor leading to the decline in domestic CPI data. The US June CPI year-on-year rate also fell from 4.2% to 3.5% for the same reason. The report also mentioned that the rise in accommodation-related prices during the World Cup partially offset the impact of falling energy prices on CPI data, especially for the cities of Toronto and Vancouver. On July 7, merchant ships passing through the Strait of Hormuz were attacked by Iranian drones, and conflicts between the United States and Iran erupted again. As of now, US crude oil prices have rebounded from a 阶段性 low of $67.06 to $84.39, a gain of 25.8%. The rebound in oil prices in July could lead to another increase in Canada's July CPI year-on-year rate. For the Bank of Canada, facing CPI data dominated by international energy prices, the optimal choice might be to continue observing and holding steady. Figure 2, Overlay of Canada Inflation Rate and Interest Rate Curve - ATFX As can be seen from the chart above, Canada's interest rates and inflation rate maintain a clear resonant relationship, with the interest rate curve lagging behind the inflation curve by several months. This aligns with the Bank of Canada's core responsibility of maintaining price stability, as well as the characteristic behavior of central banks not rashly changing interest rates due to short-term inflation fluctuations. Since the outbreak of the US-Iran conflict, there have been signs of rising inflation in Canada, but the Bank of Canada has not adjusted interest rates so far, mainly because the Bank of Canada determined that this conflict is a temporary price shock without lasting effects. After the resumption of the US-Iran conflict on July 7, the logic of a brief conflict may need to be rewritten. Counting from February 28, the duration of the conflict has been nearly five months, and Canada's CPI year-on-year rate had previously reached as high as 3.2%, far exceeding the mild inflation standard of 2%. If the July CPI year-on-year data performs better than expected, the probability of the Bank of Canada raising interest rates at its next decision will increase. In terms of market trends, USDCAD touched a high of 1.4247 on June 25 before starting a downward trend, reaching a 阶段性 low of 1.4004 on July 17. The driving factors behind this were the fall in international oil prices and the weakening expectations of Federal Reserve rate hikes. Yesterday, USDCAD rebounded quickly from its low, touching a high of 1.4071, a gain of nearly 70 basis points, influenced by the unexpectedly large drop in Canada's June CPI year-on-year rate announced by Statistics Canada. With the continued spread of the data's impact, USDCAD may maintain a rebound trend in the short term. **ATFX Risk Warning, Disclaimer, Special Statement:** There are risks in the market; investment requires caution. The above content only represents the personal views of the analyst and does not constitute any operational advice. Please do not regard this report as the sole reference. Analysts' views may change over different periods, and updates will not be notified separately.