According to market forecasts, Canada's Consumer Price Index (CPI) for September may rise by 2.3% year-on-year, exceeding the Central Bank's target of 2% and higher than August's 1.9%. Although it may decrease by 0.1% month-on-month, the overall inflation level remains high. This data will be released by Statistics Canada this Tuesday.

This expectation poses a policy challenge for the Bank of Canada (BoC). The central bank was originally considering a 25 basis point cut to 2.25% at its meeting on October 29 to stimulate the economy, but rising prices may force them to adopt a more cautious stance.

The Governor of the Bank of Canada, Tiff Macklem, previously stated that the current inflation signals are complex, and policy decisions will be "data-driven." He emphasized that if risks increase, the Central Bank will still take necessary actions.

Analysts point out that the Bank of Canada will focus on the trimmed CPI, median CPI, and core CPI as the three key indicators. The first two remain around 3%, indicating that price pressures still exist.

In the foreign exchange market, investors are closely watching the USD/CAD exchange rate trends. Market analysis suggests that if the exchange rate breaks above 1.3960 (200-day moving average), it may rise to 1.4080 or 1.4414. Conversely, if it falls below the 1.3860-1.3780 range, it could retreat to 1.3726 or even 1.3556.

Overall, if the CPI is higher than expected, it will support the Canadian dollar in the short term, but it may also force the Central Bank to slow down the pace of interest rate cuts. Conversely, if inflation weakens, it may strengthen rate cut expectations, and the USD/CAD exchange rate may rise.

This inflation data could become a turning point for the market. If the CPI is stronger than expected, the Canadian dollar may experience a short-term rebound. However, if the data is weak, the loose policies of the Federal Reserve and the Central Bank of Canada may trigger a new round of market trends. Regardless of the outcome, this will have significant implications for Canadian economic policy and the foreign exchange market.