Morning Note: US CPI Expected Up; Canada CPI Down; Oil Falls on Russia

US Inflation Expected to Rebound in June

U.S. CPI rose 0.1% m/m in May, with June expected at 0.3%. On a y/y basis, May CPI was 2.4%, with June forecasted to increase to 2.6%. The anticipated acceleration in both the monthly and yearly CPI figures for June reflects rising cost pressures in specific sectors such as energy, housing, and services. Gasoline prices, which had softened earlier in the year, began to tick up again in June, contributing to the higher m/m forecast.

Additionally, persistent strength in shelter costs and potential seasonal adjustments in travel-related services during summer may be lifting overall price levels. On the y/y basis, the expected increase from 2.4% to 2.6% partly reflects base effects, as June 2024 had relatively muted inflation figures, making the current year's price changes appear more pronounced. This data is set to be released today at 12:30 GMT.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the U.S. Dollar Index has been in a bearish trend since mid-January 2025, as reflected by a series of lower highs and lower lows. However, since early July 2025, it has shown signs of regaining bullish momentum and may potentially rise to retest the key swap zone between 98.40 and 98.70. This zone is crucial in determining the index's next directional move.

If the price breaks above this swap zone, it could extend its upward move toward the resistance area of 101.30 to 101.60. On the other hand, if bearish pressure holds firm and prevents a breakout, the index may resume its downward trend.

Is Canada's Inflation Losing Steam?

Canada’s CPI rose 1.7% year-over-year (y/y) in May, with June’s reading expected to ease slightly to 1.5%. The downward revision reflects easing price pressures in categories like food, energy, and transportation. Additionally, goods inflation continues to moderate as supply chains normalise and consumer demand cools.

The expected drop from 1.7% to 1.5% also suggests that overall inflation is moving further below the Bank of Canada’s 2% target, increasing the case for rate cuts. This aligns with broader signs of economic slowdown, as wage growth stabilises, and household spending shows signs of fatigue. This data is set to be released today at 1230 GMT.

(USD/CAD Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/CAD currency pair has been in a bearish trend since February 2025, as indicated by a series of lower highs and lower lows. It is currently retesting the swap zone between 1.3700 and 1.3730. If the price breaks above this zone, it could potentially surge higher to retest the order block at 1.3830 – 1.3860. Conversely, if bearish forces reject the breakout, the pair may be pushed lower to retest the support zone of 1.3570 – 1.3600.

Oil Falls as Trump Sets Deadline for Russia

Crude oil futures fell to around $66.70 per barrel during Tuesday’s Asian session, extending the previous day’s losses. The decline followed comments from U.S. President Donald Trump, who gave Russia a 50-day deadline to end the war in Ukraine or face tariffs of up to 100%. The move helped ease fears that new sanctions could disrupt global crude supplies, leading to a more bearish outlook for oil prices.

Additionally, Trump announced plans to send new weapons to Ukraine, including the long-requested Patriot air defence missiles. However, oil prices were also weighed down by concerns that aggressive U.S. tariffs could dampen global economic growth, potentially lowering overall energy demand.

(Crude Oil Futures Daily Chart, Source: Trading View)

From a technical analysis perspective, crude oil futures have rebounded from the support zone of 55.30 – 56.00 since May 2025, forming a bullish double bottom pattern. The price broke through the swap zone of 64.00 – 64.70, pulled back to retest it, found support, and continued moving upward. However, recent bearish pressure has pushed the price lower, and it is now retesting the order block at 66.30 – 66.80. If the price fails to find support from this order block, it may potentially drop further to retest the swap zone of 64.00 – 64.70.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.