BREAKING: CAD sees little reaction to mixed CPI inflation data

• Canada’s annual inflation fell slighlty to 6.9%YoY in September from 7.0% in August, above market expectations of 6.8%.
• Core consumer prices in Canada increased to 6.0% in September form 5.8% YoY in August.

Today's reading marked the third consecutive month of eased price growth since hitting the 39-year peak in June. Consumer prices continued to slow for transportation (8.7% vs 10.3% in August), largely due to a sustained slowdown for gasoline prices (13.2% vs 22.1%) amid an increase in the global supply of crude oil during the month. Inflation also eased for recreation, education, and reading (5.2% vs 5.7%). On the other hand, costs accelerated for food and non-alcoholic beverages (10.3% vs 9.8%), as prices for food purchased at stores rose at the fastest pace since 1981. Upward pressure on the CPI was also seen for shelter (6.8% vs 6.6%) and household operations (5.4% vs 5.1%). On a monthly basis, the consumer prices edged higher by 0.1%, rebounding from the 0.3% drop in August. 

The money market is currently pricing in a 60% chance of a 75bp hike by the BoC on October 26. Before the release of CPI figures, expectations oscillated around 30%.

Source: statcan

USDCAD saw a relatively small reaction to today’s inflation data release. The most popular currency pair continued to trade around 1.3780 level. Source: xStation5