On Thursday, USD/CAD moved a little higher, but there is no sustained purchasing to support the advance. The weaker oil prices and less hawkish BoC decision weaken the Canadian dollar. Ahead of the US GDP, the USD lingers close to the monthly low and creates a headwind.
On Thursday, there is some buying interest in the USD/CAD pair, which maintains its small intraday gains during the early European session. Although the pair is now hovering slightly above the mid-1.3500s, the upswing is not strongly positive.
The US dollar is a drag on the USD/CAD pair as it hovers at its lowest point since September 20, which was hit the day before. Market hopes for a more aggressive Federal Reserve policy tightening were dampened by indications of a downturn in the US economy. This has been a major contributing cause to the recent significant decline in US Treasury bond rates, which keeps the dollar under pressure.
A bullish outlook for the stock markets also helps to limit the safe-haven dollar’s potential rise. However, the Bank of Canada’s less aggressive decision to hike rates by 50 basis points on Wednesday rather than the expected 75 basis points restricts the downside for the USD/CAD pair. Furthermore, the commodity-linked loonie is undermined, and the major is supported by a slight decline in crude oil prices.
Aggressive traders should use some care given the conflicting fundamental background while preparing for a clear intraday direction. Currently, the market is anticipating the publication of the Advance US Q3 GDP data, which is scheduled for later in the early North American session. Durable Goods Orders and the customary Weekly Initial Jobless Claims are also on Thursday’s US economic calendar and might impact the USD.
To seize short-term possibilities around the USD/CAD pair, traders will also draw cues from the oil price dynamics and the market’s overall risk attitude. Nevertheless, next week’s FOMC policy meeting continues to dominate attention. The next leg of the greenback and the major’s directional move will be heavily influenced by this and the much-expected US monthly employment data (NFP).
USD/CAD will hit 1.40 before the year is over, according to Rabobank
50 basis points raised the policy rate to 3.75% the Bank of Canada (BoC). CAD/USD spiked to 1.3650 before falling to below 1.36. However, Rabobank’s experts predict that the pair will continue to rise, eventually reaching 1.40.
USD strength is expected to return in the following weeks. In contrast to market-implied pricing, which suggested a 75 bps increase, the BoC stunned the market with a 50 bps increase to 3.75%.
In contrast to market-implied pricing, which suggested a 75 bps increase, the BoC stunned the market with a 50 bps increase to 3.75%.
The growth predictions were lowered by 1 percentage point to 1.0% in 2023 and -0.5 percentage points to 2% in 2024. Forecasts for inflation decreased somewhat, by 0.5% to 4% in 2023 and 0.1% to 2.2%.
Even though today’s 50 bps increase was less than anticipated, “we still predict another 50 bps boost in December, 25 bps in January, and a holding pattern after that till 2024.”