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A Federal Reserve Bank of New York official responsible for implementing monetary policy said on Tuesday that the central bank's current rate control toolkit would still work in a system allowing banks to hold fewer reserves. New York Fed System Open Market Account Manager Roberto Perli also said the pace of future Treasury bill buying will be determined by market conditions.

Canadian inflation accelerated sharply in April, though less than expected, driven primarily by higher gasoline prices and fading favorable energy base effects, said RBC after Tuesday's consumer price index. Headline CPI rose 0.3% month-over-month seasonally adjusted in April, lifting the annual rate to 2.8% from 2.4% in March, below market expectations, according to the bank.

Brazil's central bank governor Gabriel Galipolo said on Tuesday that the country's heavy reliance on sovereign debt linked to the benchmark interest rate Selic weakens monetary policy transmission, as higher borrowing costs end up boosting disposable income for bondholders.

The headline consumer price index accelerated in April as gasoline prices surged, but the jump wasn't as high as expected and core measures of inflation remained muted, supporting the current wait-and-see stance of the Bank of Canada, said CIBC. Earlier Tuesday, Canada released April's CPI.

Headline prices rose just 0.4%, well below the 0.7% consensus forecast. After declining 0.1% in March, prices excluding food and energy were unchanged in April. The breadth of Canadian outsized price increases narrowed in April, with the share of consumer price index components rising faster than 3% year over year falling to 38% from 41%, said Desjardis after Tuesday's CPI.

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Brazil's central bank governor Gabriel Galipolo said on Tuesday the economy is set to face two supply shocks - higher oil prices and the risk of a very strong El Nino - at a time of elevated inflation. Speaking at a Senate hearing, Galipolo said the average of core inflation measures is currently running at the same level as headline inflation, both above the official 3% target.

Chile's central bank warned that an abrupt tightening of global financing conditions - potentially triggered by an escalation of the Middle East conflict - represents the main risk to local financial stability.

Brazil's central bank will not provide forward guidance on monetary policy decisions amid uncertainty stemming from the Middle East conflict, monetary policy director Nilton David said on Tuesday.

As expected, higher oil prices lifted Canadian inflation in April, but TD Economics isn't yet seeing much of a knock-on effect to non-energy-related goods or services, noting core inflation pressures were actually softer than expected in April. There is little argument yet for Bank of Canada rate hikes here, and market pricing for rate hikes this year has come down a bit early Tuesday, TD noted.

Canadian headline consumer price index accelerated in April as gasoline prices surged, but the jump wasn't as high as expected and core measures of inflation remained muted, supporting the current wait-and-see stance of the Bank of Canada, said CIBC. The 0.4% month-over-month non-seasonally adjusted increase was three ticks below the consensus forecast, noted the bank after Tuesday's data.

The Canadian consumer price index increased 2.8% year over year in April on rising energy prices, up from an increase of 2.4% in March, said the country's statistical agency on Tuesday. But April's CPI was lower than a 3.1% year over year consensus figure provided by MUFG.

Brazil's central bank monetary policy director Nilton David said on Tuesday the bank is troubled by inflation expectations drifting further from its 3% target - particularly for 2028, a horizon expected to be less sensitive to current shocks.

Canadian housing starts climbed by 16.5% month over month in April to a four-month high of 279,300 annualized units and beat expectations of a 245,000 print following an upwardly revised 239,700 reading in March from 235,900 initially, said Rosenberg Research.

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The U.S. Federal Reserve will avoid cutting interest rates this year, according to most economists polled by Reuters who largely pushed long-held calls for reductions into next year on hopes the current inflation flare-up is temporary.

The Canadian consumer price index for April is released at 8:30 a.m. ET on Tuesday, said Scotiabank. The bank has estimated a 1% month-over-month non-seasonally adjusted rise, with consensus at 0.7% and with a range from 0.6-1.0%, but the consensus is somewhat "thin." There is a reasonable range from 0.5-1.0%, it added.

Canada's consumer price index on Tuesday is a potential "marker mover" for Canadian government bonds and USD/CAD, said Societe Generale. Canada is slated to release CPI for April at 8:30 a.m. ET on Tuesday. The pair stalled at the 50dma, the 200dma above is situated at 1.3812 if risk sentiment "sours," writes the bank in a note to clients.

* Investors focus on potential increases to U.S. interest rates. * Oil prices fall after Trump remarks lift peace hopes. * Yen returns to intervention zone close to 160. By Stefano Rebaudo.

Canada will publish the consumer price index for April at 8:30 a.m. ET on Tuesday, said Bank of Montreal. Energy prices continued to climb in April, building on the prior month's surge, amid ongoing transportation disruptions due to the war in Iran, noted the bank.

Euro zone bonds weakened on Tuesday, with yields just shy of multi-year highs hit the previous day when investors braced for a sustained period of high energy prices that could spill over into broader inflation and cause central bank rate hikes.

Incoming Federal Reserve Chair Kevin Warsh's suggestion that independence may not extend fully to the Fed's crisis-fighting role abroad has unsettled central banking peers, who fear any reduction in its global footprint could risk market stability.

Tuesday's release of Canada's April consumer price index at 8:30 a.m. ET should show a sharp rise in headline inflation, driven by food and gasoline prices, said ING. The consensus is looking for a 3.1% year-over-year print, while core measures should remain anchored around 2.2%-2.3% year over year, noted the bank.

U.S. Trade Representative Jamieson Greer will host a meeting of G20 trade ministers in Wisconsin from September 30 to October 1, his office said, with talks to focus on forced labor, updating the Most-Favored Nation principle and global overcapacity. President Donald Trump is scheduled to host the G20 leaders' summit in Miami on December 14-15 at Trump National Doral.

It looks like the bond market is betting a Federal Reserve rate increase could be on the way -- but Fed members and economists mostly don't seem to think so.

* Trump says "good chance" of nuclear deal with Iran. * Traders see 38% chance of a US interest rate hike this year. * Minutes of Fed's April policy meeting due on Wednesday. By Noel John. Gold prices fell on Tuesday, hovering near a one-and-a-half-month low hit in the previous session, pressured by inflation fears and expectations of higher U.S. interest rates.

* Investors focus on chances of Fed rate hikes. * Oil drops after Trump remarks lift peace hopes. * Yen returns to intervention zone close to 160. By Stefano Rebaudo. The U.S. dollar rose on Tuesday as investors balanced cautious hopes for a Middle East peace deal against concerns that the Federal Reserve could raise rates to curb energy-driven inflation.

Incoming Federal Reserve chair Kevin Warsh faces both a tough environment and a "difficult boss," Standard Chartered CEO Bill Winters said on Tuesday, pointing to political pressure on Warsh to cut rates even as inflation remains high.

Incoming Federal Reserve chair Kevin Warsh faces both a tough environment and a "difficult boss," Standard Chartered CEO Bill Winters said on Tuesday, pointing to political pressure on Warsh to cut rates even as inflation remains high.

Financial market turbulence could force the Bank of Japan to go slow on the unwinding of its massive debt holdings, giving anxious bond investors some relief as surging yields lay bare worsening fiscal strains and inflation pressures.

Euro zone bonds steadied on Tuesday, with yields just shy of multi-year highs hit the previous day when investors braced for a sustained period of high energy prices that could spill over into broader inflation and cause central bank rate hikes.

Investors may now be discovering what long-term government borrowing costs are really like when you remove the potential backstop of central bank intervention from the bond market. The main driver of surging U.S. long-bond borrowing rates this year is clear enough: the Iran war, the related oil shock, racing inflation and the inevitable speculation about interest-rate rises.

Japanese government bond prices slipped on Tuesday, erasing early gains, as investors awaited details of the government's planned extra budget and the Bank of Japan's upcoming policy decision.

China is expected to leave its benchmark lending rates unchanged for a 12th consecutive month in May, a Reuters survey showed, as ample interbank cash supplies reduced the need to cut rates despite weak economic and lending activities.

* Q1 real GDP grows annualised 2.1% vs forecast +1.7% * Consumption and capex both rise 0.3%, GDP data shows. * Net external demand adds 0.3 point to growth. * Analysts expect slowdown ahead as Iran war impact intensifies. By Leika Kihara.

The U.S. dollar hit a six-week high against the euro on Tuesday as investors focused on a possible hawkish shift by the Federal Reserve to curb energy-driven inflation, while uncertainty over a potential peace deal in the Middle East also weighed on sentiment.

Japan's economy grew an annualised 2.1% in the first quarter, government data showed on Tuesday, compared with the median market forecast for a 1.7% gain. The growth in gross domestic product translated into a quarterly increase of 0.5%, which compared with the median estimate for a 0.4% rise.

Australia's central bank is worried higher energy costs will feed through to consumer prices quickly given the stretched state of the domestic economy, potentially creating a significant shift in inflation expectations.

* Oil prices rise, reversing earlier dip. * Fed policy expectations shift as investors assess Chair Kevin Warsh's response to inflation. * Japanese yen weakens as government considers new debt. By Karen Brettell.

Veterans from the U.S. Federal Reserve's past crisis-fighting efforts on Monday said incoming Chair Kevin Warsh should focus less on the central bank's balance-sheet size and more on guidelines for how to use it in response to future financial and economic shocks.