Canada’s October Inflation Figures: What Investors Need to Know
Today, Canada is set to release its inflation figures for October, providing crucial insights for investors. Here’s a breakdown of what to expect:
Key Points:
- Headline CPI expected to rebound to 1.9% YoY
- Core measures likely to stabilize around 2.4%
According to ING’s FX analyst Francesco Pesole, this report holds significant weight as it is the last CPI data the Bank of Canada will review before its upcoming meeting on December 11. The implications of these figures could impact market pricing, with current expectations split between a 25bp or 50bp rate cut.
Market Outlook:
Looking ahead, two key factors will shape the Bank of Canada’s decision-making process:
- GDP data release on November 29
- November jobs report on December 6
Despite uncertainties, a 25bp rate cut remains more probable as economic activity and inflation levels show signs of stability. Additionally, with a decrease in Fed easing expectations, market dynamics are shifting.
USD/CAD Forecast:
Currently, the USD:CAD 2-year swap rate gap sits at 100bp. There is a rationale for a slight tightening in this gap, potentially capping USD/CAD movements in the short term. As a result, it is anticipated that the USD/CAD pair will close the year below the 1.40 mark.
Overall, these inflation figures and their implications on market sentiment highlight the importance of staying informed and adaptable in today’s economic landscape.