Big surprise‼ The Canada CPI (Consumer Price Index) announced on August 17th is 3.0%!

The results from the previous day’s Canadian CPI (Consumer Price Index) exceeded market expectations significantly, reaching 3% very markedly (market expectations were 2.5%) .

3% is surprising!

Price stability is the responsibility of the Bank of Canada (BOC).

Excerpt from the BOC website

Since I can’t speak English at all, I asked Mr. Google to translate for me.

On the BOC website,Inflation Control Target states: “the midpoint of 1–3% is 2%”.

Inflation control = managing prices (stability)

Target = goal

BOC intends to control prices within the year-over-year 1–3% range.

In particular, when it exceeds 2%, monetary policy measures are prepared to curb inflation.

Last year (2017) began to exceed the 2% target, and in this announcement it finally reached 3%.

BOC has been taking steps to curb inflation since last year, including several rate hikes.

Also, last July 11, a rate hike was implemented, bringing the policy rate to 1.5%.

What’s especially notable is the two consecutive rate hikes on September 6, 2017, which surprised the market!

Nevertheless, the actions taken by the BOC seem to have been correct in hindsight.

Additionally, to gauge the economy, monitoring GDP, payrolls growth, and unemployment rate, look reasonably solid.

Given these results, there may still be room for further rate hikes.

Moreover, the BOC has the track record of two consecutive rate hikes last year as well.

Even though the rate hike was on July 11, there is expectation that a consecutive hike (on September 5) could still occur..

I still do not think the next rate hike is priced in yet.

From now on we are at the stage of factoring it in, and the Canadian dollar should rise as it is priced in.

At the time of last year’s June 2017 surprise rate hike statement, within the daily chart left purple circle showed a sharp rise by July 12.

If the rise continues at the rate seen then, tomorrow and after, within the lower daily chart right purple circle the green line would rise as well, I expect.

CAD/JPY daily chart

CAD/JPY weekly chart

This week, the Jackson Hole meeting hosted by the Kansas City Fed is scheduled.

Because leaders and key figures of major central banks gather, there can be released.

If a surprise statement comes from the Bank of Canada, the chart’s green line could rise, so I am holding a CAD long position.