On the upside, there is a possibility that household demand in Canada could be stronger than anticipated, while on the downside, the ongoing adjustment in the U.S. housing sector could be more severe than anticipated and could spill over to the U.S. economy more broadly.
Recently, the Canadian dollar has moved sharply above the trading range assumed in the July Monetary Policy Report Update, and we need to look at the causes of this strengthening, should it persist. And, as always, we need to assess the effect of movements in the exchange rate on the balance of aggregate demand and supply in the Canadian economy.