The hawkish pace at the Federal Reserve is much stronger than the Bank of Canada (BoC). Canadian Consumer Price Index (CPI) data is unlikely to alter the path of the central bank if it eases as expected, economists at Commerzbank report. 

September data likely to confirm easing inflation trends

“The Bloomberg consensus expects a further fall of the overall inflation rate from 7.0% in the previous month to 6.8% for the September inflation data due today. It is expected that two of the core rates (common, median and trim) will also have fallen slightly.”

“Results in line with expectations are not likely to impress the BoC’s rate expectations and thus CAD very much. That means the gap towards the rate expectations for the Fed, where the market expects a rate peak at approx. 5%, remains in place. Against this background, CAD is likely to struggle to gain significant ground against USD for the time being.”

“If today’s inflation data were to surprise significantly on the upside today, rate hike expectations might at least rise on a temporary basis, thus causing USD/CAD to trade at slightly lower levels.”

See – Canadian CPI Preview: Forecasts from seven major banks, signs of easing price pressures?