• The Canadian Consumer Price Index is expected to rise 1.8% YoY in September.
• The Bank of Canada has reduced its policy rate by 75 bps so far this year.
• The Canadian Dollar has been losing considerable ground in October.

Statistics Canada is set to release its latest inflation data tracked by the Consumer Price Index (CPI) for the month of September on Tuesday. Forecasts suggest that the headline CPI could have risen 1.8% year-over-year (YoY) last month.

Alongside the headline data, the Bank of Canada (BoC) will release its core CPI, which excludes more volatile components such as food and energy. In August, the core CPI showed a 0.1% monthly decrease and a 1.5% rise from a year earlier. Meanwhile, the headline CPI climbed by 2.0% over the last twelve months — the lowest level since February 2021 — and dropped by 0.2% compared to the previous month.

These inflation figures are being closely monitored for their potential impact on the Canadian Dollar (CAD), especially in light of the BoC's current easing cycle. It is worth recalling that the BoC has reduced its policy rate by 25 basis points at its June, July, and September meetings so far this year, taking the reference interest rate to 4.25%.

In the FX world, the Canadian Dollar has depreciated in the last nine consecutive days, sending USD/CAD to the 1.3800 zone for the first time since early August.