Recent data suggests inflation will continue to decline to the U.S. central bank's 2% target, Federal Reserve Governor Adriana Kugler said on Tuesday, citing the faster drop in price pressures in recent months,

Both Chairman Jerome Powell and Fed Bank President Daly see encouraging signs that could help a decision on rate cuts.

Chair Jerome Powell said the Federal Reserve is becoming more convinced that inflation is headed back to its 2% target and said the Fed would cut rates before the pace of price increases actually reached that point.

Canada's main stock index extended its record-setting advance on Tuesday, led by gains for Shopify and helped by domestic inflation data that added fuel to recent moves into stocks that could particularly benefit from lower interest rates.

Canada's main stock index hit a record high on Tuesday after domestic annual inflation eased more than expected in June, boosting hopes for another rate cut by the Bank of Canada. The country's annual inflation rate cooled a tick more than expected to 2.

Canadian inflation returned to a downward path in June despite some lingering price pressures on consumers, shortening the odds of further rate relief from the central bank next week.

Canada's slower-than-expected rise in consumer prices in June has firmed up expectations that yet another rate cut by the Bank of Canada is coming next week, extending some more relief to home owners and indebted businesses.

The inflation reading gives some economists more confidence that the Bank of Canada will cut its benchmark interest rate this month.