CAD's Ceiling: A 10-Day Decline, Inflation Drop, and What the Bank of Canada's Rate Decision Means for the Future

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3680-1.3870

Euro                 1.4920-1.5130

Sterling            1.7840-1.8060

WTI Oil (opening level) $70.25

Did we finally hit the ceiling for the CAD? After 10 consecutive days of the CAD falling (weaker) against the USD we finally have an opening stronger than the day before.

Have we turned a corner? Not likely. But it is interesting to me that we have not been able to break above 1.39. 3 times in the last 2 years we have seen the rate go to the mid 1.38's and every time the market has moved back to the 1.35-36 level within the next month. I guess we will have to see what material changes the Bank of Canada makes with interest rates next week.

Yesterday the inflation rate in Canada fell to 1.6%, dropping below the 2% target. This will affect the Bank of Canada Oct 23 rate decision on interest rate policy. BOC is considering cutting another 25 to 50 bps. This is probably built into the market psychology now, so we will likely see exchange rates stay in this range for the next week.