Canadian inflation misses forecast as French unrest impacts currency markets

Canadian inflation rose to 3.1% in September, coming in below the 3.2% forecast. While headline inflation was lower than expected, gasoline prices saw a significant year-on-year increase of 27.8%. The Bank of Canada’s core measure eased to 2.2% from 2.4%, with core prices remaining flat for the month. In response to these figures and shifting expectations, analysts from Scotiabank and Bank of Montreal have suggested a quarter-point interest rate hike for the October 28 decision.

In Europe, the EUR/CAD currency pair saw a sharp decline following violent nationwide protests in France. Demonstrations over living costs and school conditions led to rioting and looting in cities including Paris, Marseille, Lyon, and Bordeaux. The unrest, which resulted in approximately 2,400 arrests and significant business damage, has heightened fiscal risk premiums in the region. Meanwhile, the Canadian Dollar has found support from recent surges in oil prices.