The Canadian dollar rose in Oct. 19 trading while markets priced in higher odds of a Bank of Canada rate hike, with an inflation report and weak jobs data shaping the outlook.
Reuters reported the currency was 0.3% higher at C$1.4095 per U.S. dollar in afternoon trading. The agency said swap-market pricing implied about an 80% chance of an Oct. 28 rate increase, compared with 30% on Oct. 16.
Before the inflation release, ING FX strategist Francesco Pesole said markets had priced nine basis points of tightening for October and a 25-basis-point increase by December. He forecast USD/CAD at 1.420 at the end of October and year-end 2026, and said the Canadian dollar had little room for further gains.
Statistics Canada reported that consumer prices rose 3.1% over 12 months in September, up from 3.0% in August and above the Bank of Canada’s 1% to 3% target range. Gasoline prices increased 27.8% year over year, while inflation excluding gasoline eased to 2.2% from 2.4%. Monthly prices rose 0.1%, below ING’s 0.2% forecast. The figures follow EconoTimes’ earlier coverage of Canada’s inflation report.
The Bank of Canada said firms’ one-year inflation expectations rose in September after Canada-U.S. trade talks broke down and oil prices increased. About three-quarters of the survey’s main interviews took place before the breakdown. Around half of respondents expected to pass some tariff- and Middle East conflict-related cost increases on to customers over the coming year. Hiring plans remained soft. Separately, Statistics Canada reported employment fell by 42,000 in August and 68,000 in September, while unemployment rose to 6.5% from 6.4%.
The Bank of Canada held its target for the overnight rate at 2.25% on Sept. 2. Its next rate announcement is set for 9:45 a.m. ET on Oct. 28, when it will also publish a Monetary Policy Report.
