News about USDCAD

Statistics Canada said annual inflation rose to 3.1% in September, led by a 27.8% jump in gasoline prices from a year earlier as the Middle East war kept pushing up gas prices, despite the switch to cheaper winter gas. Excluding gasoline, consumer prices rose 2.2%, while fuel oil surged 57.8%, hitting Atlantic Canada hard where many homes are heated with oil. Grocery inflation slowed to 1.7%, its smallest yearly increase since May 2024, as fresh vegetables fell 2.9% and sugar and confectionery dropped 2.7%, while beef rose 8.7% after 11% in August. Shelter prices rose 1.8%, up from 1.5% in August, with mortgage insurance up 4.9% and home maintenance and repair costs up 1.2%.

Canada's annual inflation rose to 3.1% in September, driven by a 27.8% jump in gasoline prices from a year earlier, even with the switch to a cheaper winter blend. Excluding gasoline, consumer prices rose 2.2%, while fuel oil and other fuels surged 57.8%, hitting Atlantic Canada hard. Grocery prices rose 1.7%, the smallest yearly increase since May 2024, though they are up 33% since September 2020. Shelter prices rose 1.8%, up from 1.5% in August, largely due to a 4.9% increase in mortgage insurance.

The Canadian dollar has weakened in a slow but steady 'leak' against the U.S. dollar, down about 5% since early last summer and as low as 70 U.S. cents this month; it was trading at 70.91 this morning. CIBC says a Fed rate hike this month or in December could push the loonie lower, raising import prices and potentially adding about 0.3 percentage points to inflation, though it is 'nothing to panic over yet.' Capital Economics notes consumer goods import price inflation is already 8.6%, and odds of a Bank of Canada hike at the October 28 meeting have fallen below 30%. The worst-case scenario described is a 50% U.S. tariff on Canada's auto industry from January 1 combined with cooling energy prices, which could turn the next move into a rate cut; if energy prices stay high and the loonie keeps weakening, the central bank may need to hike more aggressively.

The Bank of Canada (BoC) is expected to raise its inflation forecast significantly this month, Governor Tiff Macklem said, citing high oil prices and Middle East tensions. The revised projections will be key to the October 28 rate decision. Macklem warned that disruptions to oil shipments and refinery damage raise the risk of inflation becoming broader and harder to control, though the bank remains committed to its 2% target and ready to adjust policy. Markets expect no rate change on October 28 or in December, but money markets price in about 100 basis points of hikes in 2027. WTI crude closed at $101.84 per barrel on October 16, up 3.95%.