Canadian Dollar Loses Ground After Inflation Data

2026-02-17 13:58 By Felipe Alarcon 1 min. read

The Canadian dollar weakened toward 1.367 per US dollar, pulling back after briefly testing the 16 month highs reached in late January, as softer domestic inflation and fading terms of trade support eroded its policy and commodity backing.

January CPI slowed to 2.3% while the Bank of Canada’s trimmed mean eased to 2.4%, with gasoline plunging 16.7% year over year and shelter inflation cooling, reinforcing evidence that price pressures are moderating and reducing the likelihood of renewed tightening.

With the policy rate at 2.25% and officials signaling that settings are broadly appropriate, markets are flattening the expected rate path, narrowing Canada’s yield support relative to peers.

At the same time, crude oil faces renewed supply headwinds as OPEC+ considers resuming output increases in April, limiting gains in Canada’s key export and weakening the terms of trade channel that typically underpins the loonie.



News Stream
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