The Canadian Dollar (CAD) receded on Wednesday, backsliding another 0.2% against the US Dollar after the Bank of Canada (BoC) delivered a widely expected 50 bps rate cut. Rate traders are already pricing in a further double rate cut in December as the BoC grapples with Canada’s rapidly deflating economic landscape.
Canada continues to see the downside opening up in economic data prints, spurring the BoC to step up the pace of rate cuts heading into the end of the year. Canadian Retail Sales figures from August are slated to print on Friday, and are expected to stick to the trend and moderate further. However, the long-dated data is unlikely to spark much movement.
Momentum continues to drag the Canadian Dollar (CAD) lower, with the Loonie finding a fresh 11-week low against the Greenback on Wednesday. USD bulls are on pace to chalk in a fourth straight winning week against the CAD, and the USD/CAD chart is set to rechallenge the 1.3900 handle in the coming days.
It’s getting difficult for technical traders to ignore a long-run spiral baked into USD/CAD weekly candlesticks. The pair has ground out chart paper in a sideways channel since late 2022, with price action bouncing sharply between the 1.3900 and 1.3300 levels. Despite the Greenback’s recent hot streak against the Loonie, USD/CAD could be poised for a fresh tilt into the bearish side if bids can’t pierce into fresh multi-year highs above 1.4000 in the next few weeks.
The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.
Read more.Last release: Wed Oct 23, 2024 13:45
Frequency: Irregular
Actual: 3.75%
Consensus: 3.75%
Previous: 4.25%
Source: Bank of Canada
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