Bringing back the cuts to US and Canada, US CPI preview — North American mid-week Market update

Log in to our mid-week North American Markets overview, where we examine the current themes in North America and provide an overview of indices and currency performances.

This week, some data dampened the economic outlook for both the US and Canada. The past four months didn't show much in that aspect, and participants started to believe that tariffs wouldn't influence activity that much.

However, it seems that the markets were too optimistic for North America. August gave a first warning sign, with the US Non-Farm Payrolls showing the first crack in the labor market, which was confirmed by last Friday's report.

Canada is also struggling with a regressing GDP in the second quarter, undoubtedly due to downbeat employment figures (-60K in August) and pressure from tariffs on key exports such as metals (aluminum, steel) and lumber.

The degrading economic outlook and slowdown in hiring are essentially bringing back hopes for cuts with a 90% priced-in Bank of Canada reduction (from 2.75% to 2.50%) at the upcoming meeting on the same day as the FOMC, September 17th.

For the Federal Reserve, a much-anticipated cut should also finally take place (Rates are currently at 4.50%), and the question from which we will get an answer tomorrow is:

Will Consumer Prices take a significant bump, barring the way for a 50 bps cut?

Any release below the expected 0.30% raise should flush the US Dollar, and markets would heavily lean towards a 50 bps (currently at 10% pricing).

On the other hand, a beat should leave the 25 bps in check but reduce odds for cuts at subsequent meetings (2 meetings after this one: October and December).

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Let's dive right into a few charts to get an overview on North American Markets, from US and Canadian equity Markets performance, USD and CAD performance to USDCAD and DXY charts.

Same as in previous weeks, the TSX just seems to absolutely disregard the downbeat economic data.

Never forget that equities are forward looking and cut expectations in an economy that is still far from in shambles and expected to grow in the decades to come attract buying.

US Markets are still holding resiliently against the streak of downbeat employment data also lifted by hopes for increased rate cuts.

All indices have marked new record highs in today's session actually but have since seen some profit-taking flows ahead of tomorrow's inflation report.

The US Dollar is holding its range as neither the NFP or this morning's PPI have changed the outlook for future rate cuts.

This puts that much emphasis on tomorrow's CPI report which should be one of the most important one in years. Get ready!

With the range still holding, I invite you to check out our most recent Dollar Index analysis to spot your levels of interest for the USD.

The action in the US Dollar has stayed stubbornly rangebound.

The latest downward revisions to the US Labor data since March 2025 (you can check out the report right here) had initially hurt the USD, but as can be seen in the latest rebound, buyers have held its bid at new range extremes.

War headlines around the world still maintain somewhat of a US Dollar demand which slightly reduced after this morning's welcomed PPI report (are tariff-related price hikes really just a one-off??)

Expect high swings for the USD tomorrow as markets will look to confirm the outcome of next week's FOMC.

The Loonie couldn't hold its past week's strength with the aggressively low employment figures released last Friday. This week has been atrocious for the Maple Dollar.

Check out the technicals for the Canadian Dollar against its major counterparts as the CAD gets at the brink of new extreme lows.

With more cuts expected ahead, it will be very interesting to see what the Bank of Canada will have to say at next week's meeting. The BoC would also love a higher rate cut from the USD to help with the CAD's current downfall.

USDCAD has freshly marked some highs at similar levels as the August 26th top, but seems to be consolidating at the current daily peak.

It will be very interesting to spot the reactions for the US Dollar and if an eventually stronger USD would also assist the CAD on its perpetual descent.

Levels to place on your USDCAD charts:

Resistance Levels:

• 1.3925 August 22 highs (most recent peak)
• 1.3850 to 1.3860 Main resistance (1.38670 daily highs)
• May Highs 1.40185

Support Levels:

• immediate Pivot 1.38 Handle +/- 150 pips
• Key longer-term pivot Zone 1.3750
• Main Support Zone 1.3675 to 1.3686

Another invitation (in case you missed the first one) to check out our latest USDCAD analysis!

With Markets not budging much from the consequent NFP and PPI reports, everything will depend on tomorrow's US CPI release (8:30 A.M. ET).

With 0.3% expected for both the Headline and Core, reactions will have to be monitored closely as Markets will jump around in all directions.

To guide you with tomorrow's volatility, track the Dollar Index, the FEDWatch Tool (for Interest rate expectations) and the 2-year yield.

For the rest, look at the usual equity sentiment.

Except for tomorrow's US CPI, some other less-relevant data may still move markets with the Weekly jobless claims tomorrow, Canadian capacity utilization on Friday (8:30) and the following University-of-Michigan Consumer Sentiment at 10:00 A.M.

Safe Trades!

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