TORONTO, June 22 (Reuters) - The Canadian dollar weakened to a 14-month low against its U.S. counterpart on Monday as the greenback posted broad-based gains, but the loonie's losses were kept in check as domestic data showed inflation accelerating to a 29-month high.
The loonie was trading 0.1% lower at 1.4162 per U.S. dollar, or 70.61 U.S. cents, after touching its weakest intraday level since April 2025 at 1.4193.
"Firmer inflation on the margin is taking some heat off of CAD," strategists at TD Securities, including Jayati Bharadwaj, said in a note.
Canada's annual inflation rate in May rose more than expected to 3.2% as the impact of higher crude oil prices due to the Iran war continued to filter through gasoline costs. Measures of underlying inflation closely followed by the Bank of Canada were more subdued.
The U.S. dollar added to its gains against a basket of major currencies since last Wednesday's Federal Reserve policy announcement.
The Fed's new projections and comments from Kevin Warsh, who was presiding over his first meeting as chair, were more hawkish than markets anticipated.
"The bar for the Fed to hike is lower than that for the BoC, but that now looks largely priced in," the TD Securities strategists said. "Markets are also pricing for prolonged USMCA uncertainty and extended negotiations."
Canadian officials will meet their Mexican and U.S. counterparts on July 1 for the first trilateral meeting to review the U.S.-Canada-Mexico trade agreement, CTV News reported on Saturday.
The price of oil , one of Canada's major exports, fell 2.6% to $74.60 a barrel after U.S. Vice President JD Vance said progress has been made in talks with Iran and that the Strait of Hormuz was open, easing supply concerns.
Canadian bond yields moved higher across the curve, with the 2-year up 3 basis points at 2.810. Still, the 2-year fell 1.9 basis points further below its U.S. equivalent to a gap of roughly 140 basis points in favor of the U.S. note.
Reporting by Fergal Smith; Editing by Will Dunham
