Zephyrnet Logo

Canadian dollar gets spanked, BoC holds rates – MarketPulse


The Canadian dollar is almost unchanged on Thursday, after sliding 0.8% a day earlier. In the European session, USD/CAD is trading at 1.3569, up 0.04%.

BoC holds interest rates

There were no surprises from the Bank of Canada, which maintained the cash rate at 5%. This marked a sixth straight pause as the BoC continues its “higher for longer stance”. The BoC statement noted that while inflation remains too high, core inflation had moved lower in recent months and the BoC “will be looking for evidence that this downward momentum is sustained”.

Governor Macklem used his news conference to address the nagging question of when the BoC will lower rates, saying it needed to see lower inflation decline further in order to be sure that price stability is achieved. As for a June cut, Macklem was vague, saying it was “within the realm of possibilities”.

The BoC would love to have the Federal Reserve cut rates first in order for a BoC cut to have more impact. However, with the US and Canadian economies on diverging paths, the BoC may have to press the trigger first and trim rates. Canada’s growth has been weak and inflation has fallen to 2.8%. In contrast, the US economy has been robust, with last week’s nonfarm payrolls blowing past expectations and inflation rising to 3.5%.

The hot US inflation report for March sent the US dollar flying against the majors on Wednesday, and the Canadian dollar fell 0.8% and touched a low of 1.3703 against the greenback, its lowest level since November 24.

The markets have slashed expectations for an initial rate cut as the Fed will be reluctant to lower rates with inflation moving higher. Just one week ago, the markets had priced in a September cut at 95%; that has been pared to 66% following the inflation report, according to the CME FedWatch tool.

USD/CAD Technical

  • USD/CAD faces resistance at 1.3738 and 1.3794.
  • 1.3647 and 1.3591 are providing support

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.

Kenny Fisher

Kenny Fisher

Latest posts by Kenny Fisher (see all)


Latest Intelligence