USD/CAD Little Changed after the BoC Hold
USD/CAD Analysis
The Bank of Canada decided to keep rates at 5.0% on Wednesday, after two back-to-back hikes [1]. The economy is in a period of "weaker growth", as last week's data revealed a contraction of 0.2% in the second quarter. The labor market has "continued to ease gradually", with unemployment rising for the past three months, reaching the highest level in over a year in July (5.5%).
On the other hand, employment conditions remain somewhat tight, with elevated wage growth. Most importantly, CPI inflation accelerated to 3.4% y/y in July, after having eased over the previous two months. This keeps policymakers on their toes, who are "concerned about the persistence" of underlying price pressures. As such, they kept more tightening in play, stating their readiness to hike rates further if needed, making yesterday's decision a hawkish hold.
The US Fed announces its decision in two weeks, with markets widely expecting a pause. Things are murkier after that though, as the economy is strong and the labor market hot despite some easing, sustaining the higher-for-longer prospects.
USD/CAD rose in June and July as the BoC had resumed its rating hiking cycle, but has entered its second straight losing month, with the greenback benefiting from prospects of more monetary restrain by the Fed. After Wednesday's hold by the BoC, the pair was little changed. It maintains its bullish bias though and keeps the 2023 highs in its crosshairs (1.3863).
However, it shows indecision this week and a pullback to the EMA200 (1.3480-90) would be reasonable. Daily closes below it could pause the upside bias, but strong catalyst would be needed for that and the downside appears well-protected, starting the with the daily Ichimoku Cloud.
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.
References
| Retrieved 18 Apr 2026 https://www.bankofcanada.ca/2023/09/fad-press-release-2023-09-06/ |
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.