Loonie Volatility Ahead as Canada Releases August CPI Rates

Canada's August Consumer Price Index (CPI) rates are set to release today and could have a significant impact on the Canadian dollar. The US CPI rates for August came in as expected, but inflationary pressures remain elevated, giving the Federal Reserve room to tighten monetary policy if needed.

The Canadian dollar is closely tied to oil prices, which rose 7-8% last week after market hopes for diplomacy to ease tensions in the Middle East were dashed by new strikes on Saudi Arabian energy infrastructure and civilian targets. Renewed or intensifying tensions could push oil prices even higher.

Should Canada's CPI rates accelerate, it may provide support for the Loonie. However, a slowdown could weigh on the CAD.