Canada’s Core Consumer Price Index (CPI) rose from 2.6% to 2.8% year-on-year in September. This means consumer prices in Canada are increasing. In the foreign exchange markets, the strong US dollar has led to lower gold prices and affected currency pairs like EUR/JPY and GBP/USD. The Euro is struggling around the 1.1600 level, while GBP/USD is staying below 1.3400 due to the robust dollar.

Commodity Market Trends

Commodity markets are seeing stable prices for WTI oil amid ongoing worries about oversupply. Gold prices have hit new multi-day lows as a result of a stronger US dollar and profit-taking. In the cryptocurrency market, major currencies like Bitcoin, Ethereum, and Ripple have all dropped. This decline is linked to economic uncertainties and geopolitical tensions that are impacting global markets. Despite these recent worries, there’s some relief as the global economy is performing better than expected, although many underlying changes are still unclear. Trends in corporate asset ownership show a significant drop in Bitcoin treasury inflows over the past five years. These market trends and economic indicators continue to shape financial conditions, highlighting the need for ongoing analysis to understand these complexities.

Bank Of Canada Interest Rate Outlook

With September’s core inflation in Canada hitting 2.8%, which is higher than expected, we believe the Bank of Canada is likely to adopt a hawkish stance. This figure is alarmingly close to their 3% target range. All eyes will be on the Bank’s next interest rate decision on December 4th, 2025, as pressure mounts for action. Traders should expect changes in the short-term interest rate markets. There’s now a higher likelihood of a rate hike being factored into Canadian Overnight Repo Rate Average (CORRA) futures, indicating an expectation for higher short-term yields in Canada as a response to the inflation data. For currency markets, this news complicates the outlook for the Canadian dollar. While higher interest rates could support the CAD, the strong US dollar poses challenges, especially since the Federal Reserve has kept rates steady throughout 2025. This scenario suggests that any strength in the Canadian dollar might be limited, opening up possibilities for range-trading strategies in USD/CAD derivatives. The rise in inflation comes at a complicated time. Other data from 2025 points to a cooling economy, with Canada’s unemployment rate rising to 5.9% in the third quarter, up from below 5.5% in late 2023. This situation puts the Bank of Canada in a tough spot, needing to balance fighting inflation and supporting a slowing job market. Considering the inflation surge from 2022 to 2023, we expect central banks to be less patient with ongoing price pressures. This historical perspective indicates that the Bank of Canada is likely to prioritize controlling inflation, even if it means sacrificing some economic growth. Options traders should prepare for higher volatility in the Canadian dollar in the weeks leading up to the December meeting. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now