- The Loonie appreciates against the US Dollar following the Bank of Canada 50 bps rate hike.
- The Bank of Canada expects further tightening as core CPI persists at 5%.
- After the BoC’s decision, the USD/CAD tumbled from around 1.3660 to its daily low of 1.3588.
The USD/CAD tumbled during the North American session after the Bank of Canada (BoC) lifted rates by 50 bps, from 3.75% to 4.25%, in line with analysts’ expectations, triggering a fall from around 1.3700 to 1.3505. At the time of writing, the USD/CAD remains volatile, trading around 1.3600-1.3615.
Bank of Canada remarks of its monetary policy statement
The Bank of Canada mentioned that inflation worldwide remains high and broadly based. Even though growth is slowing, the BoC said that the US economy is proving to be resilient, with consumption rising and the labor market “overheated.” They commented that supply bottlenecks are easing, though geopolitical events could disrupt it.
The BoC acknowledged that the labor market is tight, and the Q3 GDP was stronger than expected and commented that “there is growing evidence that tighter monetary policy is restraining domestic demand, consumption moderated in the third quarter, and housing market activity continues to decline.”
The Governing Council noted that inflation remains too high, and short-term inflation expectations remain elevated. Traders should know that CPI is at 6.9%, while core CPI is around 5%.
The BoC finished its statement by saying that further rate hikes would be needed to bring supply and demand into balance, adding that Quantitative Tightening (QT) “is complementing increases in the policy rate.”
USD/CAD Reaction to the Bank of Canada decision
The USD/CAD 5-minute chart portrayed the pair as seesawing around the daily pivot point at 1.3630 and the 1.366 area before the decision crossed newswires. After the headline, the USD/CAD tumbled towards its daily low of 1.3587 before stabilizing in the 1.3600-1.3620 range, below the 20-Exponential Moving Average (EMA) at 1.3623.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Trading Pro
Account
7.2
8.2
7.2
Tools
5.2
Service
6.6
Trading
8.0
Trust
5.0
Experience
7.0
Recommended content
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.