News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CAD https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/08/04/US-Dollar-Price-Action-Setups-EUR-USD-EURUSD-GBP-USD-GBPUSD-USD-CAD-USDCAD.html https://t.co/vRuwBes7bH
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.10% Gold: 0.03% Silver: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/UeR1femBvZ
  • US Treasury Secretary Yellen: - We have seen significant price increases in recent months - Expects to see elevated inflation rates for some time - Inflation will recede in not too distant future and fall to levels in line with price stability by the end of the year $USD #Gold
  • @RichDvorakFX inverse H&S pattern in the context of the bull flag puts emphasis on bullish breakout potential...need >4430 for bullish confirmation imo
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 94.38%, while traders in France 40 are at opposite extremes with 78.27%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/x6BPnBF4lP
  • S&P 500 on the verge of breaking small consolidation pattern. Dow Jones looking for a new record high. Get your market update from @PaulRobinsonFX here:https://t.co/cbYD5oFkpb https://t.co/jjRuAK1fdb
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.00% France 40: 0.00% FTSE 100: -0.00% US 500: -0.29% Wall Street: -0.77% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/PXEHH2xMun
  • AUD/USD extends the advance following the Reserve Bank of Australia (RBA) interest rate decision to mark the first three-day rally since June. Get your market update from @DavidJSong here:https://t.co/ObJHENt4hS https://t.co/xblMeXF02N
  • USD/JPY on Pace to Print Bullish Engulfing Candlestick - #USDJPY chart https://t.co/8NWolvqA9S
  • Canadian #Dollar Outlook: $USDCAD Recovery Vulnerable- #Loonie Levels - https://t.co/uIEYdDj35x https://t.co/4Z2ot5z2Uz
USD/CAD Plunges after BoC Hikes Key Interest Rate to 1.75%

USD/CAD Plunges after BoC Hikes Key Interest Rate to 1.75%

Peter Hanks, Strategist

Talking Points:

  • The interest rate bump was relatively unsurprising, despite the large reaction in the Canadian Dollar
  • Hawkish comments from BOC officials contributed to the Canadian Dollar’s climb Wednesday
  • The Bank of Canada’s next scheduled interest rate announcement is December 5th, 2018

The Bank of Canada (BOC) expectedly hiked its overnight benchmark rate by 25 basis points Wednesday, resulting in an interest rate of 1.75%. Although largely unsurprising, the rate decision and monetary policy report brought with it a large reaction in the Canadian Dollar. Therefore, the reaction was likely due to the latter, which bolstered the case for a hawkish Canadian central bank.

In the report, Bank of Canada officials found the Canadian economy to be near its full potential and the outlook for growth stable. A renewed sense of trade stability from the freshly inked USMCA agreement also contributed to their case for further hikes. However, as the central bank seeks to reach a neutral rate, they did highlight some areas of concern.

Join our analysts for Live Webinars that range from live coverage of central bank decisions and economic data breakdowns to trading Q&A’s.

The most notable concern was the outlook for emerging market economies. Officials found the case for growth in many emerging countries to be slipping as trade wars and energy cost uncertainty weigh on growth expectations. Still, officials were confident in the Canadian economy moving forward.

USD/CAD Price Chart (1) Daily, Year-to-Date

USD/CAD price chart on rate decision

Despite a breakthrough on NAFTA and relatively higher crude prices, the Canadian Dollar has slipped notably versus the US Dollar in the year-to-date. Up to Wednesday’s rate decision, the Loonie had surrendered well over 4% to the US Dollar.

USD/CAD Price Chart (2) Hourly, October

USD/CAD price chart plunge after rate change

Following the rate decision, the pair dipped precipitously to October’s trend line support. Despite the hawkish comments from the Bank of Canada, the Federal Reserve remains equally if not more-so committed to raising interest rates. Thus, the decision and report are unlikely to deliver any fundamental shift in the pair.

View our Economic Calendar for other important data releases like Friday’s US Q3 GDP.

The pair will now look to Friday’s release of US Q3 GDP data and core PCE data for influence. A sharp miss on either of these key figures could weigh on the Fed’s hawkish stance and culminate in a shift in fundamentals for the two North American Dollars, but such an outcome is highly unlikely.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Canadian Dollar Rebounds as Bank of Canada Hints at Hike Strategy

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES