USD/CAD dips to 1.4035 as Canada PPI jumps 2.0% m/m, BoC hike bets at 80%

USD/CAD is down 10 pips at 1.4035 after Canada's September producer price data showed accelerating pipeline inflation. Industrial producer prices rose 2.0% m/m, up from the prior 1.3%. On an annual basis, PPI climbed to 14.5% y/y from 13.5%. Pressure was stronger further up the supply chain: the raw materials price index increased 4.8% m/m versus 3.3% previously, and 27.0% y/y versus 22.9% prior. Markets are pricing an 80% chance of a Bank of Canada rate hike on October 28. This week's CPI reading came in on the low side, but the PPI figures point to inflation still building in the pipeline, which supports the case for further tightening. The source notes that the modest decline in USD/CAD shows how the dynamic in the FX market has totally flipped. No support or resistance levels were cited. For traders, the October 28 Bank of Canada decision is the key event, with producer and raw materials inflation adding to the arguments for a hike already reflected in market pricing.