FX.co ★ Canadian Dollar Steady at 3-Week Highs

The Canadian dollar appreciated to exceed 1.43 per USD, marking its highest value in three weeks. This movement is attributed to rising inflationary pressures and alleviated trade tensions, which have created a complex economic landscape. In February, the consumer price index surged to 2.6% on a year-on-year basis—the most rapid increase in eight months—primarily due to the conclusion of a federal sales tax holiday that had previously mitigated food and grocery prices. This unexpected rise, alongside a 1.1% monthly increase and heightened core inflation indicators, has amplified worries about persistent price pressures. Such concerns might prompt the Bank of Canada to reconsider its monetary easing policies. Concurrently, senior Canadian officials have acknowledged significant progress in trade talks between the U.S. and Canada. Both nations have reached preliminary agreements to gradually reduce retaliatory tariffs, aiming to stabilize trade flows and address pivotal concerns such as tariff escalations on essential goods.