Canadian Dollar Near One-Month High
The Canadian dollar strengthened to around 1.41 per US dollar in October, reaching a near one-month high following the release of September inflation data. Canada’s annual inflation rate rose to 3.1%, its highest level in four months, driven by higher gasoline prices, but came in below market expectations of 3.2%. While rising energy prices pushed headline inflation higher, underlying measures remained subdued, with CPI-median slowing to 1.9% and CPI-trim easing to 1.8% in September. Despite the downside surprise, the outlook for Bank of Canada policy remained tilted toward tighter conditions, as policymakers flagged upside risks to inflation. Governor Tiff Macklem said on Saturday that the central bank expects to raise its quarterly inflation forecast significantly this month, following hawkish remarks last week about energy-driven price pressures. Expectations of a narrowing US-Canada interest-rate differential have provided further support for the loonie.
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The Canadian dollar strengthened to around 1.41 per US dollar in October, reaching a near one-month high following the release of September inflation data. Canada’s annual inflation rate rose to 3.1%, its highest level in four months, driven by higher gasoline prices, but came in below market expectations of 3.2%. While rising energy prices pushed headline inflation higher, underlying measures remained subdued, with CPI-median slowing to 1.9% and CPI-trim easing to 1.8% in September. Despite the downside surprise, the outlook for Bank of Canada policy remained tilted toward tighter conditions, as policymakers flagged upside risks to inflation.
Governor Tiff Macklem said on Saturday that the central bank expects to raise its quarterly inflation forecast significantly this month, following hawkish remarks last week about energy-driven price pressures. Expectations of a narrowing US-Canada interest-rate differential have provided further support for the loonie.