• The Bank of Canada's Governing Council did not want to set expectations for a rate reduction in the near future, as per the September 6th announcement minutes.
  • The Council's discussions revolved around either maintaining the current rates or increasing them.
  • Given the uncertain trajectory of core inflation, maintaining a stricter policy should be considered.
  • The lack of improvement in underlying inflation is a major worry.
  • The Council deliberated if high core inflation might continue even as signs show that restrictive monetary policy is dampening demand.
  • Many core inflation metrics appear to be persistent, with little change observed since the July rate announcement.
  • There's concern over the proportion of items in the CPI basket that are increasing at an annualized rate exceeding both 3% and 5%.
  • The Council anticipates that rising oil and gasoline prices will push inflation up in the coming months.
  • The balance between economic supply and demand will play a pivotal role in determining future core and total inflation.
  • The large drop in commodity prices will soon be excluded from inflation calculations.
  • BOC Minutes: Governing Council observed that the impact of base-year effects will diminish.

The minutes are more tilted to the hawkish side.

Looking at the hourly chart below, the price of the USDCAD moved lower after testing the 200 day MA at 1.3462. The subsequent fall, saw the price extend down to test the 100 day MA at 1.33975. The price is currently at 1.3412 and trading quietly after the meeting minutes. Traders seem to be awaiting the FOMC rate decision at 2 PM ET. The Fed is expected to keep rates unchanged at 5.25% to 5.50%. The focus will be on the dot plot for 2023 (was at 5.6% in June) and for 2024 (at 4.6%). The PCE inflation projections also be eyed.

The USDCAD is testing the 100 day MA