CAD flows: CAD firmer as CPI comes in on the strong side of consensus

USD/CAD is down 20 pips with Canadian September CPI data coming in clearly on the strong side of consensus. All the core measures watched by the BoC came in above consensus, and this puts the BoC rate decision on October 29 in the balance. Ahead of the data, a cut was 86% priced into the curve, but 2 year yields are up 2bps on the data and a cut is now fair from certain. USD/CAD had already returned to a level consistent with the historical relationship with 2 year yields, and the risks may now be shifting towards a break back below 1.40, although this may require some further support for the possibility that the BoC leaves rates unchanged this month.