USD/CAD Slips as Canadian Inflation Surprise Lifts Loonie

Canadian inflation accelerated faster than expected during the week of August 17-21, giving the loonie a fresh bid against its US counterpart. The data complicates any dovish pivot from the Bank of Canada and reinforces the case for the CAD to hold ground even as broader risk sentiment stays choppy.

On the US side, the Fed's hawkish FOMC minutes were largely brushed aside by traders, who instead chose to price in upcoming rate cuts. That divergence in policy expectations, hot Canadian inflation against a softening Fed stance, has become the key driver squeezing USD/CAD from the top.

With NZD and AUD also posting broad gains against the dollar this week, the greenback's weakness looks systemic rather than pair-specific, adding another layer of pressure on USD/CAD bulls looking for a bounce.