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Canadian Dollar May Not Be Among Top G10 Currency Performers as Bank of Canada Seen on Hold Amid Lower-Than-Expected Inflation, Says SocGen

BY MT Newswires | ECONOMIC | 10:06 AM EDT

10:06 AM EDT, 05/20/2026 (MT Newswires) -- Headline inflation rose 0.4 percentage point to 2.8% in April, staying below the Bank of Canada's forecast of around 3% year over year, said Societe Generale after Tuesday's consumer price index.

Core inflation dipped to 2.0% year over year, the lowest since 2021, noted the bank.

The data is a let-off for the front and long end of the curve and means the central bank has the luxury to wait, even with the policy rate pegged back at the low end of the neutral range, stated SocGen.

With policy rates projected to increase again in Australia and Norway over the summer, the Canadian dollar (CAD or loonie) may slip down the G10 ranking and struggle on a relative basis, according to the bank.

USD/CAD traded up to a one-month high of 1.3774, added SocGen.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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