In September, Canada’s wholesale sales exceeded expectations, showing a growth rate of 0.6%, while forecasts predicted no growth. This growth signals increased activity in the wholesale sector, suggesting a positive trend compared to earlier predictions.

Improvement in Economic Conditions

The data highlights better economic conditions. The unexpected jump in sales is significant for Canada’s market during that time. These figures show overall economic resilience. Surpassing forecasts gives us a hopeful outlook for future reports. With the surprising 0.6% increase in wholesale sales for September 2025, it seems the Canadian economy has more momentum than we thought. This rise against a zero-growth prediction challenges the notion of a rapidly cooling economy, adding complexity to the Bank of Canada’s perspective for the upcoming months. This report builds on recent data, like October 2025’s CPI figures, which came in at 2.9%, higher than the 2.7% expected. Coupled with a strong job market, the wholesale numbers suggest that demand isn’t dropping off as quickly as we feared. The market may be underestimating the Bank of Canada’s commitment to maintain restrictive rates into early 2026.

Interest Rate Implications

For interest rate traders, this means the chances of a rate cut at the Bank of Canada’s December 2025 meeting are decreasing. We should consider strategies that benefit from stable rates, like selling CORRA futures or buying options to protect against unexpected rate increases. Looking back to 2023, we saw central banks willing to keep rates high for longer, ensuring inflation remains controlled. In currency markets, this economic strength is positive for the Canadian dollar. A less accommodating Bank of Canada, especially while the US Federal Reserve appears to be in a prolonged pause, could lower the USD/CAD exchange rate. We are monitoring whether options markets start pricing in a higher chance of breaking below the 1.3500 support level tested last month. On the equity side, conditions are mixed, so we should be cautious. A stronger economy generally boosts corporate earnings, but the possibility of sustained higher interest rates may put pressure on the S&P/TSX 60 valuations. We are considering purchasing call options on interest-sensitive sectors, such as Canadian financials that thrive in a stable rate environment, while also looking at index puts for protection against broader market weakness. The main point is that implied volatility may increase as we approach the next Bank of Canada meeting. This uncertainty, similar to what we experienced in early 2024, offers opportunities for strategies that can take advantage of price fluctuations. We are exploring options spreads that can benefit from this elevated uncertainty without taking a definitive position. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now