Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3820-1.4070
Euro 1.6100-1.6350
Sterling 1.8310-1.8560
WTI Oil (opening level) $60.45
The CAD/USD is opening at 1.3945 ( 0.7171 )
The Bank of Canada is widely expected to trim its benchmark interest rate by another quarter point today, bringing it down to 2.25%. That would follow a similar move in September as the central bank continues its gradual easing cycle.
The case for more cuts has been building. Growth has stalled, the labour market has lost momentum, and inflation remains stubbornly above target. Canada’s economy shrank by 1.6% in the second quarter, worse than forecast, while the job market surprised with a 60K gain in September, keeping the Unemployment Rate steady at 7.1%.
Inflation remains a sticking point. Headline CPI rose 2.4% YoY last month, surpassing expectations, and core CPI climbed to 2.8%. The Bank’s preferred measures—Common, Trimmed, and Median CPI—also nudged higher to 2.7%, 3.1%, and 3.2%, respectively.
Headlines
· Trump and Xi will discuss halving 20% fentanyl-related tariffs on Chinese goods. The U.S. will roll back tariffs if China curbs chemical exports used to make fentanyl. The final agreement depends on their meeting and future negotiations, with expected reductions in port fees on each other's ships.
· Australia Sep. CPI out at 3.5% YoY vs. 3.1% expected and 3.0% in Aug., while the “Trimmed Mean” measure rose 2.8% vs. 2.6% in Aug. For the Q3 CPI figures, headline CPI rose 1.3% QoQ and 3.2% YoY vs. 1.1%/3.2% expected, respectively, while the Trimmed Mean Q3 measure rose 1.0% QoQ and 3.0% YoY vs. 0.8%/2.7% expected, respectively.
· US ADP Payrolls Changes will now be reported weekly, starting yesterday. In the four weeks ending October 11, 2025, US private businesses added an average of 14,250 jobs weekly, indicating a monthly growth of about 57,000 jobs, this versus September's reported 32,000 of job losses.
· The August S&P Cotality 20-City House Price Index rose 1.6% year-on-year, the smallest annual increase since July 2023 but above the expected 1.3%. Home price growth continues to lag behind the 3% inflation rate, reflecting a decrease in homeowners' real wealth. New York led with a 6.1% rise, followed by Chicago and Cleveland, while Tampa saw a 3.3% decline. The month-on-month index rose +0.19% versus an expected fall of -0.1%.
· In September 2025, Eurozone consumer inflation expectations fell to 2.7%, while three-year and five-year forecasts held at 2.5% and 2.2%, respectively. Income growth expectations were 1.1%, with economic growth at -1.2%. Unemployment held steady at 10.7%, indicating labor market stability. Home prices were expected to rise 3.5% in the next year.
· Trump mentioned considering Scott Bessent for Federal Reserve chair during a Japan visit, despite the Treasury Secretary leading the search and ruling himself out. He praised the Secretary's market-calming skills during his second term's first year.
· Sterling traded sharply lower yesterday on a UK Office for Budget Responsibility report indicating weaker productivity growth than anticipated, which means an additional GBP 20 billion gap in the budget that Reeves may try to fill with tax and other measures that could crimp growth next year.
Key Points
· Equities: Records in the US while Europe was flat, Asia mixed with Japan higher on chip strength while Hong Kong slipped ahead of China PMI.
· Volatility: Fed decision in focus, VIX up
· Digital Assets: Bitcoin steady near $113k, ETH above $4k, strong ETF inflows (IBIT, ETHA), altcoins mixed ahead of Fed and Trump–Xi meeting
· Currencies: USD largely neutral to slightly firmer, with Sterling weakness and AUD strength after hot AU inflation figures in focus.
· Commodities: Gold and silver bounce from consolidation lows yesterday.
· Fixed Income: US treasuries locked in tight range ahead of FOMC
· Macro events: Bank of Canada Decision, US FOMC decision