Canada Inflation Data in Spotlight Before BoC Decision

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3640-1.3890

Euro                 1.6130-1.6380

Sterling            1.8650-1.8900

WTI Oil (opening level) $63.14

The CAD/USD is opening at 1.3767 ( 0.7264 )

Statistics Canada will publish August’s inflation figures today. The numbers will give the Bank of Canada a fresh read on price pressure as the central bank weighs its next move on interest rates. The BoC is expected to trim the interest rate by 25 basis points to 2.50% on Wednesday.

Economists expect the headline Consumer Price Index to slightly surpass the BoC’s 2.0% target in August, following a 1.7% annual gain in July. On a monthly basis, prices are still forecast to climb 0.1%. The BoC will also be watching its preferred “core” measure, which strips out the more volatile food and energy components. In July, that gauge rose 2.6% from a year earlier and edged 0.1% higher from June.

Headlines

·    Canada's manufacturing sales rose 2.5% to CAD 70.3 billion, the largest increase since January 2023, exceeding the 1.8% forecast. Growth was driven by transportation equipment and aerospace products.

·    An appeals court blocked the White House from removing Federal Reserve Governor Lisa Cook from her post for now, while the Senate approved Trump's economic adviser Stephen Miran as a governor who will now join the Federal Reserve board amid Trump's pressure on the central bank to cut interest

·    The New York Empire State Manufacturing Index dropped to -8.7 in September 2025, signaling a manufacturing decline. New orders and shipments fell sharply, while inventories and employment remained flat. Input prices stayed high, and selling prices were moderate. Optimism and employment are expected to remain flat.

·    Trump reported positive US-China talks in Europe and plans to speak with China’s President Xi on Friday, hinting at a deal. Treasury Secretary Bessent confirmed a TikTok framework and upcoming talks. He differentiated anti-money laundering from the fentanyl issue, suggesting a potential 90-day tariff truce extension before November 10th.

·    The SEC is "prioritizing" a proposal to reduce the frequency of corporate earnings reports after Donald Trump called for an end to quarterly reports. Trump said companies should report on a six-month instead of quarterly, which he claims will save money and allow managers to focus on running their companies.

Key Points

·    Equities: U.S. rose on tech and communication services strength ahead of the Fed; Europe firm as luxury and banks led; Asia mixed with Japan higher while China slipped

·    Volatility: VIX mid-teens, skew higher, Fed event risk, SPX ±65pts

·    Digital Assets: BTC $116k, ETH $4.5k, strong ETF inflows IBIT/ETHA, mixed alts

·    Fixed Income: US treasuries firm, while Japan’s and Europe’s short yields near cycle highs

·    Currencies: US dollar appears on verge of breaking down, CAD firms

·    Commodities: Gold breaks to fresh record ahead of FOMC rate decision