Created
: 2024.09.04
2024.09.04 19:40
The USD/CAD pair trades sideways near 1.3550 in Wednesday's European trading hours. The Loonie asset struggles for direction as investors await the Bank of Canada's (BoC) interest rate decision, which will be announced at 13:45 GMT.
Investors see the BoC cutting its key borrowing rates by 25 basis points (bps) to 4.25%. This will be the third straight interest rate cut decision by the BoC, which it started in June after gaining confidence that price pressures will return to bank's target of 2%. Also, the Canadian economy was struggling to bear the consequences of BoC's restrictive interest rate stance, which forced them to start unwinding high rates.
Though the BoC is widely anticipated to cut interest rates, investors will majorly focus on the interest rate guidance and the economic outlook. Signs of deeper policy-easing this year from the monetary policy statement or BoC Governor's Tiff Macklem press conference or both would weigh heavily on the Canadian Dollar (CAD).
Meanwhile, the US Dollar (USD) corrects slightly from fresh two-week highs as United States ISM Manufacturing PMI data for August exhibited contraction in the factory activities at a faster-than-projected pace. The PMI came in at 47.2, missed estimates of 47.5 but improved from eight-month low of 46.8.
This week, the major trigger for the US Dollar is the US Nonfarm Payrolls (NFP) data for August, which will be published on Friday. The official employment data will influence market expectations for Federal Reserve (Fed) interest rate cut size this month. Weak payrolls would prompt peculation for Fed large rate cut while steady or better figures would allow the Fed to start the policy-easing process gradually.
The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.
Read more.Next release: Wed Sep 04, 2024 13:45
Frequency: Irregular
Consensus: 4.25%
Previous: 4.5%
Source: Bank of Canada
Created
: 2024.09.04
Last updated
: 2024.09.04
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy