USDCAD Declines Ahead of BoC Release
The CAD has benefitted from the appreciation in oil over the last few days. Moreover, yesterday's Ivey PMI beat forecast, printing at 61.2 (60.2). The Bank of Canada is due to release its December rate statement and overnight rate today at 3:00 pm GMT. This is likely to introduce volatility. Rates are expected to remain at 0.25%, with hikes expected by markets in March next year. This would be earlier than the BoC has previously communicated. Attention is also drawn to Canada's trade surplus. At CAD2.1bn, this is the largest surplus in close to a decade. Floods in British Columbia are like to affect next month's trade numbers, but there is little doubt that the Canadian economy has momentum behind it. Below, the USDCAD declines over the same period that USOil appreciates (blue boxes).
Past Performance: Past Performance is not an indicator of future results.
An argument may be made for hawkishness. Inflation is above 3%, and there is a growing acknowledgment that inflationary pressure is more entrenched than previously thought. Governor Macklem has acknowledged this persistence. The jobs data on Friday, 3 December, had a huge surprise to the upside, with 153.7K created jobs against the forecast of 36.5K. Unemployment also beat the consensus of 6.6%, coming in at 6%. A rate increase is unlikely, but the market may be disappointed if the BoC's tone does not have, at least, hints of hawkishness, omicron notwithstanding.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.