USD/CAD Dropped as BoC Rate Cut Was No Surprise
USD/CAD Analysis
The Bank of Canada is at the forefront of monetary easing, as it delivered its third consecutive 0.25% cut on Wednesday. During his press conference, Governor Macklem once again pointed to more moves ahead and spoke of "strong consensus" regarding the size of the move. [1]
Despite the favorable monetary policy differential, the pair comes from a losing August. The Fed may have not joined the easing club yet, but has pointed to a pivot this month and markets are aggressively pricing in at least 100 bps of cuts this year. Furthermore, the BoC outcome failed to deliver any dovish surprise, as officials did not go for a larger move.
USD/CAD reacted negatively to yesterday's decision and bias remains on the downside, sustaining risk for sub-1.3419 moves, although further weakness would need strong catalyst.
On the other hand, market pricing around the Fed appears stretched, leaving room for disappointment, while Canadian rates are significantly lower. USD/CAD runs a profitable week and has the ability to push for the EMA200 (black line). Daily closes above it would pause the bearish bias, but the upside does not look particularly friendly.
The next leg of the move will be determined by Friday's employment reports from US and Canada. The Fed is placing increasing emphasis on the labor market and does not want further cooling. Another soft print would bolster calls for a larger cut, but upside surprise could burst market euphoria. Canadian unemployment is at two and a half year highs and further rise could embolden official to pick up speed.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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| Retrieved 12 Jun 2026 https://www.bankofcanada.ca/multimedia/press-conference-policy-rate-announcement-september-2024/ |
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