Canada: Annual CPI eases to 0.7% in December vs. 1% expected

• Inflation in Canada eased to 0.7% YoY in December.
• USD/CAD remains weak near 1.2700 ahead of BoC.

Inflation in Canada, as measured by the Consumer Price Index (CPI), fell 0.2% MoM in December, data published by Statistics Canada showed this Wednesday. On a yearly basis, the CPI eased to 0.7% as against consensus estimates pointing to a reading of 1%. The readings were well below market expectations.

Conversely, the Bank of Canada's (BoC) Core CPI, which excludes volatile food and energy prices, bettered market expectations and held steady at 1.5% YoY.

Market reaction

The USD/CAD pair showed little reaction to the mixed inflation report and remained depressed below the 1.2700 mark as market participants await the latest BoC monetary policy decision.