Canadian dollar weakens 0.5 against the greenback
Touches its weakest since Dec. 12 at 1.3609
Canada39;s annual inflation rate cools to 2.8
Bond yields fall across the curve

TORONTO, March 19 Reuters The Canadian dollar weakened to a threemonth low against its U.S. counterpart on Tuesday as coolerthanexpected domestic inflation data bolstered expectations of the Bank of Canada beginning to cut interest rates in the coming months.

The loonie was trading 0.5 lower at 1.36 to the U.S. dollar, or 73.53 U.S. cents, after touching its weakest intraday level since Dec. 12 at 1.3609.

Canada39;s annual inflation rate in February unexpectedly cooled to 2.8, its slowest pace since June, and core inflation measures eased to morethan twoyear lows.

The Canadian economy is much weaker than the headline data suggests, and we39;re now starting to see that weakness manifest within nearly all macro indicators, even the BoC39;s preferred core measures of inflation that were a major sticking point for the bank back in 2023, said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.

Money markets see a 75 chance of the BoC easing in June, up from roughly 50 before the data.

The Bank of Canada is in a tough place, said Darcy Briggs, a portfolio manager at Franklin Templeton Canada.

The data alone … it would suggest that the Bank of Canada has a green light to cut rates but they39;re kind of tethered to Fed policy. And part of that has to do with if they start…