Over the weekend, U.S. Federal Reserve (Fed) Chair Janet Yellen used a seminar bringing together officials of the world’s largest central banks to repeat her belief that inflation should be making an appearance in the coming months. Interestingly, the remarks from the European Central Bank and the Bank of England were remarkably consistent with those of the Fed. Nevertheless, Yellen made the point most definitively, shrugging off Friday’s disappointing inflation reading and stating that soft inflation readings will not persist and the strength of the economy should lead to a gradual rise in the key interest rate.
In short, the Fed certainly appears to be laying the groundwork for a December rate hike. It should be noted that markets currently place a 77% probability on such an occurrence. This morning, the U.S. dollar is posting gains against the other major currencies.
Still on the topic of inflation, we’ll have a better idea of the situation in Canada on Friday with the release of the Consumer Price Index. We’ll also be keeping an eye on U.S. Industrial Production on Tuesday.
Julien Duquette
Range of the day: 1.2475 – 1.2585