BUNDS: Limited Hawkish Reaction To HICP Fades

• RES 4: 1.4200 Round number resistance  
• RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
• RES 2: 1.4111 High Apr 10
• RES 1: 1.4039/80 High Oct 24 / 16 and the bull trigger
• PRICE: 1.3922 @ 14:02 GMT Oct 29
• SUP 1: 1.3915 50-day EMA  
• SUP 2: 1.3840 Bull channel base drawn from the Jul 23 low 
• SUP 3: 1.3769 Low Sep 19 
• SUP 4: 1.3727 Low Aug 29 and a bear trigger

A short-term bear leg in USDCAD remains intact and the pair has tested the next important support, at 1.3915, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement and potentially expose a channel support at 1.3840. The bull channel is drawn from the Jul 23 low. Note that the trend condition remains bullish and the move down is considered corrective. Key resistance is at 1.4080, the Oct 16 high.

Along with the expected 25bp rate cut, the key phrase from the policy statement eyeing a rate pause ahead (vs market/analyst expectations split between a further 25bp cut or a post-October pause coming into this meeting) drives a mildly hawkish reaction (USDCAD dropped 0.1% but has now reversed, OIS-implied rate path relatively flat continuing to show about another half-cut in the path).

• "If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment."
• Though Governing Council doesn't close the door to another cut: "If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank’s forecast."
• On inflation, the BOC continues to eye broader measures beyond trim/median core as expected in portraying a relatively benign outlook: "The Bank’s preferred measures of core inflation have been sticky around 3%. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2½%. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near 2% over the projection horizon."
• On the labour market: "Canada’s labour market remains soft" but "Slower population growth means fewer new jobs are needed to keep the employment rate steady."
• On Growth: "GDP growth is expected to be weak in the second half of the year. Growth will get some support from rising consumer and government spending and residential investment, and then pick up gradually as exports and business investment begin to recover."
• A comparison of the October BOC rate decision statement vs the prior edition in September in PDF below:
• OctvsSept2025StatementComparison.pdf

• MNI: US NAR SEP PENDING HOME SALES INDEX 74.8 V 74.8 IN AUG
• US NAR SEP PENDING HOME SALES +0.0% MOM; -0.9% YOY