Canada’s Inflation Spikes, U.S. Tensions Rise… What Does This Mean?
Inflation Pops, Markets Bounce, and Tariff Tensions Return
Hope your coffee’s strong and your portfolio’s stronger ☕📊
Because despite hotter-than-expected inflation, the Canadian stock market pulled off a surprise rally. But with trade tensions brewing and volatility lurking, this week was anything but boring.
Here's what you need to know (and why it matters for your money).
1. Tuesday’s inflation shook markets
Canada’s CPI came in hotter than expected, with inflation accelerating to 2.4%. The report sparked investor concern that the Bank of Canada might hold off longer on any potential rate cuts. Economists now weigh it as 50/50 odds. As a result, the TSX dropped sharply (down 1.7% on the day) as sectors, like utilities and gold also took a hit.
By Friday, market sentiment turned more positive. Two key drivers:
Tech names like Shopify and Celestica rebounded strongly, helping lead the recovery.
🇺🇸 U.S. inflation data came in cooler than expected, boosting optimism that rate hikes are done south of the border, and giving Canadian investors a reason to breathe.
📈 The TSX finished the week up 0.8%, despite some mid-week turbulence.
⚜️ Gold fell 1.3% Friday, but broader sentiment held up.
2. CAD/USD Watch
The Canadian dollar inched higher, climbing from $0.7119 USD to around $0.7135 USD by the end of the week.
That rebound came despite hotter inflation data and ongoing trade tensions with the U.S., suggesting markets are still weighing in global momentum (like the U.S. CPI cooldown) and rate cut expectations from the Bank of Canada 🏦.
Still, the loonie has lost ground in 4 of the last 5 weeks, and its recovery remains fragile heading into the next BoC decision on Oct 29.
3. Canada–U.S. World Series
Over the weekend, 🇺🇸 U.S. President Donald Trump announced a 10% tariff hike on Canadian goods, right after an Ontario government ad aired during the World Series 🥎, featuring Ronald Reagan’s 1987 speech warning against protectionism.
Trump called the ad a “hostile act” and claimed it was “fake,” halting ongoing Canada–U.S. trade discussions.
Ontario Premier Doug Ford, who commissioned the ad, said it was meant to show how tariffs hurt both Canadian and American workers. After speaking with Prime Minister Mark Carney, Ford confirmed the ad campaign will be paused starting Monday “so that trade talks can resume.”
📦 So far, Canada hasn’t responded with counter-tariffs. But…
U.S. consumers will likely absorb most of the cost through higher prices
Canadian exporters may still suffer if demand from the U.S. slows due to tariffs
Investors are watching closely for ripple effects on inflation, earnings, and the TSX
💡 It’s a clear reminder:
Even one political move (like a 30-second ad 📺) can rattle trade relationships and create waves through jobs, supply chains, and even cause volatility in your portfolio.
📆 What to Watch Next:
Oct 29: Bank of Canada rate decision
The good news is: Canada’s 2.4% inflation is still lower than the U.S. (3.0%) and U.K. (3.8%).
This could be a big moment. If inflation stays sticky and the job market holds up, the BoC may delay rate cuts.
But any signs of weakness could change that fast.
Your Finance Coach, Finance Femster
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