Fundamental Analysis
Expected Decision
Markets anticipate a 25-basis-point rate cut, bringing the policy rate to 2.25%. The central bank aims to counteract economic slowdown and rising unemployment, though doubts persist due to resilient core inflation.
Canadian Inflation (September CPI)
Annual CPI accelerated to 2.4% in September (from 1.9%), driven by higher food and rental costs. Core indicators (CPI-trim and CPI-median) remain above 3%, showing persistent inflationary pressures.
Risks & Market Narrative
The main risk is that a cut could spur demand, making it harder for inflation to return to the 2% target. The Bank remains data-dependent, with the market expecting a potential pause after this cut and a low probability of further near-term easing.
Official Stance
Governor Macklem is likely to maintain a cautious tone: cutting rates to support the economy, but closely watching for inflation risks. Future decisions will be strictly guided by the economic data.
USDCAD | H4 Technical Analysis – Top Signals
- The pair holds a short-term bearish bias after breaking the 1.3976 support and reaching the demand zone at 1.3949.
- A retracement toward 1.3976 or the supply zone at 1.3996 — current weekly volume POC — is expected ahead of the news.
- From the supply area, further declines are likely toward support at 1.3932, the next demand zone at 1.3913, and finally, the key support at 1.39.
- As long as the price closes below 1.3976, the probability favours continued downside after the Bank of Canada’s decision.
