Insights 
VT 
Canada’s retail sales for August matched projections, with a month-on-month increase of 1%. The figures align with expectations, reflecting steady consumer spending levels.
Globally, the markets show varying trends. The USD/CHF experienced a decline as the SNB ruled out negative interest rates, while GBP/USD slipped as lower UK inflation bolstered expectations of a dovish BoE approach.
Commodity Influence On Currencies
Commodity strength has positively influenced the AUD/USD. Conversely, despite rising oil prices, USD/CAD stabilised due to a stronger US Dollar.
Gold prices appeared stable around $4,150, bolstered by caution ahead of US CPI data. In the cryptocurrency realm, Bitcoin and Ethereum showed attempts at breaking out, driven by a reignited risk-on sentiment.
Japan’s new Prime Minister Takaichi might influence the Yen with potential policy mismatches. Meanwhile, Aster saw a slight increase in value, indicating positive trends in the crypto market.
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We saw Canadian retail sales come in at 1% for August, which was solid but met expectations. However, looking at the market today on October 23, 2025, that data is now less important. More recent preliminary data for September suggests a slowdown to around 0.2%, shifting our focus to potential economic cooling ahead of the winter.
Interest Rate Speculations
This trend puts pressure on the Bank of Canada, which has been holding its key interest rate at 4.75% for the last two quarters. Options markets are now pricing in a greater than 50% probability of a rate cut in the first half of 2026. This potential for lower rates is starting to weigh on the Canadian dollar.
Despite the dovish tilt from the central bank, we see crude oil providing strong support for the loonie. West Texas Intermediate (WTI) has been consistently trading above $90 per barrel, driven by tight supply and renewed global travel demand. This creates a classic tug-of-war for the USD/CAD pair.
For derivative traders, this uncertainty is an opportunity. Instead of making a simple directional bet on USD/CAD, consider strategies that benefit from a significant price move in either direction. Volatility is expected to pick up, so long straddles or strangles using options could be an effective way to play the upcoming moves.
We must also watch the US side, as the Federal Reserve is sending its own dovish signals. Looking back, the Fed paused its aggressive hiking cycle in 2024, and Fed funds futures now show a 60% chance of a rate cut in the US by mid-2026. This race to ease between central banks could mute a major breakout in the currency pair for now.
