Today’s inflation data for September might provide more clarity as to whether the BoC might have to take further action. According to the Bloomberg consensus, an improvement in inflation data is not expected. Against this background, speculation about further rate hikes might continue. The BoC kept the door open for that due to the stubbornly high core inflation. Principally this might provide support for CAD.

In the current environment, CAD is likely to struggle to make any ground though. The robust economic data from the US supports USD. In addition, USD benefits from the increased uncertainty due to the conflict in the Middle East. That means a sustainable recovery of CAD against USD seems unlikely for now.