Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3900-1.4150
Euro 1.6120-1.6370
Sterling 1.8320-1.8570
The CAD/USD is opening at 1.4027 ( 0.7129 )
USD/CAD is holding above 1.4000. Canada’s underlying inflation backdrop backs the Bank of Canada’s guidance that it might be done easing.
In October, headline CPI eased to 2.2% y/y (consensus: 2.1%, BOC Q4 forecast: 2.0%) vs. 2.4% in September, reflecting lower gasoline prices. Excluding food and energy, CPI rose to an eight-month high at 2.7% y/y vs. 2.4% in September.
Core CPI (average of trim and median CPI) printed at 2.95% y/y (consensus: 3.00%, BOC Q4 forecast: 2.9%) vs. 3.10% in September, persistently above the 2% target. Markets imply a steady BOC policy rate at 2.25% over the next 12 months and rate hikes in the next two years. That limits CAD downside.
Headlines
· After weeks of blackout, investors will finally get long-delayed readings on the strength of the US economy as government agencies resume publishing key indicators, starting with the delayed September jobs on Thursday
· Fed Vice Chair Philip Jefferson said he sees risks to the labor market as skewed to the downside, but warned that policymakers need to proceed slowly, while Fed Waller advocates for continuing interest rate cuts, supporting a 25bps cut in December to ensure the labor market, which he sees as weak. US inflation aligns with the 2% target, and expectations remain anchored. Tariffs are viewed as a one-time shock. US GDP growth slowed in H2 2025, with weakened consumer sentiment and affordability issues affecting spending. Waller believes no upcoming data, including jobs report, will alter his view on the need for another rate cut.
· Canada's inflation dropped to 2.2% in October 2025 from 2.4% in September, approaching the Bank of Canada's 2% target. Gasoline prices fell 9.4%, slowing transportation inflation to 0.7%. Food and shelter inflation eased, while cellular service costs rose 7.7% after major price hikes. The trimmed-mean core inflation rate decreased to 3%.
· US construction spending increased 0.2% month-over-month in August 2025, matching July's revised rise and defying a forecasted 0.1% decline. Residential spending surged 0.8%, balancing a 0.2% drop in non-residential activity. Private construction spending grew 0.3%, while public spending remained unchanged. Year-on-year, construction spending fell 1.6%, with 2025's first eight months totaling $1,438 billion, 1.8% below 2024 levels.
· The NY Empire State Manufacturing Index climbed to 18.7 in November 2025 from 10.7 in October, exceeding the forecast of 6. Manufacturing activity grew strongly, with significant gains in new orders and shipments. Delivery times lengthened slightly, while supply availability worsened and inventories expanded. Employment increased slightly, and workweeks lengthened. Price increases remained high, but pace slowed. Future business condition optimism fell, with the index dropping to 19.1 from 30.3.
· The European Commission increased its Eurozone 2025 growth forecast to 1.3% from 0.9%, expecting 1.2% in 2026 and 1.4% in 2027, driven by strong exports and investments. Germany is forecasted to grow 0.2% in 2025, rising to 1.2% thereafter. France is expected to grow 0.7% in 2025, then 0.9% and 1.1%. Spain will lead with 2.9% growth in 2025, followed by 2.3% and 2.0%. Italy is set to grow 0.4% in 2025 and 0.8% in the following years.
Key Points
· Equities: US fell as AI leaders and rate-cut hopes were tested; Europe extended losses; Asia weakened with China data and Hong Kong under pressure
· Volatility: Vix elevated, expected spx move ±2% this week, call-skew slightly upside
· Digital Assets: Bitcoin ~90k, Ethereum <3k, Institutional trusts (ibit/etha) under pressure
· Fixed Income: US Treasuries bid overnight as risk sentiment deteriorates
· Currencies: JPY remains weak. Pro-cyclical currencies from AUD to Scandies weaker on weak risk sentiment.
· Commodities: Risk off and rising volatility drive broad weakness across recent winners