In November, Canada’s Industrial Product Price Index rose by 0.9%, exceeding the anticipated increase of 0.3%. This data reflects a stronger-than-expected rise in industrial prices during this period.<\/p>\n
The increase suggests robust activity in the industrial sector, potentially impacting various industries within the economy. The higher-than-expected price index may influence economic strategies moving forward.<\/p>\n
With the November industrial product price coming in three times higher than expected, we see a clear signal of persistent inflation at the producer level. This challenges the market’s previous assumption that the Bank of Canada was on a clear path to begin cutting interest rates in the first half of 2026. This data suggests that the cost pressures facing manufacturers are not easing as quickly as we thought.<\/p>\n
We should now adjust our view on short-term interest rates, as the probability of a rate cut in the first quarter has significantly decreased. Overnight Index Swaps, which track the market’s rate expectations, have already priced out almost 20 basis points of easing that was expected by April 2026. Therefore, positions that bet against imminent rate cuts, such as selling futures contracts on Canadian government bonds, should be considered.<\/p>\n
This inflationary surprise is also a bullish signal for the Canadian dollar. Higher interest rate expectations tend to strengthen a currency, and we’ve seen the USD\/CAD exchange rate drop below 1.3500 following the news. Given that oil prices have also remained firm, with WCS holding above $82, we can anticipate further strength in the loonie.<\/p>\n
We remember from the post-pandemic period in 2021 that rising producer prices were a powerful early warning for a surge in consumer inflation. This suggests a need for caution, as the upcoming Consumer Price Index report for December will be watched extremely closely to see if these costs are being passed on. Until then, we should view this IPPI data as a reason to hedge against a more hawkish central bank than previously anticipated.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canada\u2019s Industrial Product Price Index rose 0.9% in November, surpassing expectations and signaling sector strength.<\/p>\n","protected":false},"author":62,"featured_media":16964,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43385","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=43385"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43385\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16964"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=43385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=43385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=43385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}