Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3920-1.4170
Euro 1.6200-1.6450
Sterling 1.8670-1.8920
WTI Oil (opening level) $63.17
The CAD/USD is opening at 1.4044 ( 0.7120 )
Statistics Canada will publish September’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 2.25% at its meeting on October 29.
Economists expect the headline Consumer Price Index to rise 2.3% in September, surpassing the BoC’s target, following a 1.9% annual gain in August. On a monthly basis, prices are forecast to drop by 0.1%, matching the contraction recorded in the previous month.
The BoC will also be watching its preferred core measure, which strips out the more volatile food and energy components. In August, that gauge rose 2.6% from a year earlier and came in flat for July.
Looking at what this does to the USD/CAD rate. The tone could move the market to challenge the October 14 high of 1.4080, and if that is broken then we could look at the April high of 1.4414. Otherwise, the 200 day moving average is 1.3963 that if taken out would see the next level of 1.3861 be explored.
Headlines
· Japan has a new Prime Minister as LDP leader Sanae Takaichi is set to become the country’s first female prime minister after a vote in the lower house that saw her winning a slim majority of four votes. The LDP will team up with the Ishin party in a minority coalition. Takaichi plans to appoint Toshimitsu Motegi as Foreign Minister and Minoru Kihara as Chief Cabinet Secretary.
· The US and Australia have signed a pact to boost America's access to rare earths and other critical minerals, aiming to counter China's control over supply chains. The agreement includes joint investment in mines and processing projects in Australia as the two nations pledge to protect their domestic markets from "unfair trade practices".
· White House advisor Kevin Hassett expects the government shutdown to end this week but warned of "stronger measures" if not. The shutdown's third week sees Republicans pushing for a short-term funding bill while Democrats insist on extending ACA tax credits.
· Small businesses tell U.S. Supreme Court that Trump tariffs are an illegal $3 trillion tax on American companies, urging the court to affirm the lower court ruling against the legality of tariffs. The tariffs remain in place for now, awaiting a ruling after the Supreme Court hears the case.
Key Points
· Equities: Tech and banks lifted the U.S.. Europe rose on defence and semis. Asia firm with Japan and Hong Kong strong on policy hopes
· Volatility: VIX drops to 18. Calm returns
· Digital Assets: Bitcoin -2.6%. ETH -2.9%. Macro and ETF flows drive sentiment
· Fixed Income: Japan’s government bonds rally as LDP’s Takaichi set to become PM
· Currencies: USD strong across the board, JPY weakest as LDP’s Takaichi set to become PM
· Commodities: Strong gold rebound is met with fresh profit taking