Forex News
Governor Tiff Macklem took questions from reporters, offering markets a clearer sense of how the central bank was thinking. His remarks followed the widely expected decision to hike the policy rate by 25 bps to 2.50%.
BoC's press conference takeaways
We are seeing more investment in the energy sector.
Even with this hike, the policy rate is low enough that it is not restraining growth.
There is no predetermined path for rates.
Any time you are changing direction, it is always a difficult decision.
Inflation is looking less likely to be well contained.
Uncertainty over the economy is hanging over the housing market.
Borrowing rates are weighing on the housing market.
We debated a hold and an increase; we always do that.
This section below was published at 13:45 GMT to cover the Bank of Canada's policy announcements and the initial market reaction.
The Bank of Canada (BoC) hiked its policy rate by 25 basis points (bps) to 2.50% on Wednesday, in line with market expectations. Attention now shifts to Governor Tiff Macklem's press conference at 14:30 GMT, where investors will be looking for additional details on the decision and any clues about the future path of monetary policy.
BoC policy statement key highlights
There could be a need to increase rates again.
Given uncertainties, the Governing Council agreed to proceed carefully.
The combination of higher-for-longer energy prices and increased pass-through adds to the persistence of inflation in the projection.
While businesses have largely absorbed higher input costs so far, Bank surveys suggest cost pass-through will increase over the next year.
Rates were raised to reduce the risk that continuing high energy prices spread broadly to prices of other goods and services.
Longer-term inflation expectations remain well anchored, while a broad set of indicators continues to point to some excess supply in the economy.
The growth forecast is subject to considerable uncertainty, particularly regarding trade ties with the US.
Market reaction
The Canadian Dollar (CAD) trades with modest gains vs. the Greenback on Wednesday, prompting USD/CAD to hover around the 1.4050 region in the wake of the central bank’s interest rate decision.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.08% | 0.11% | -0.09% | -0.13% | 1.15% | 0.12% | |
| EUR | 0.11% | 0.19% | 0.23% | 0.02% | -0.02% | 1.26% | 0.23% | |
| GBP | -0.08% | -0.19% | 0.04% | -0.17% | -0.19% | 1.07% | 0.04% | |
| JPY | -0.11% | -0.23% | -0.04% | -0.21% | -0.24% | 1.03% | -0.01% | |
| CAD | 0.09% | -0.02% | 0.17% | 0.21% | -0.04% | 1.24% | 0.21% | |
| AUD | 0.13% | 0.02% | 0.19% | 0.24% | 0.04% | 1.29% | 0.26% | |
| NZD | -1.15% | -1.26% | -1.07% | -1.03% | -1.24% | -1.29% | -1.01% | |
| CHF | -0.12% | -0.23% | -0.04% | 0.00% | -0.21% | -0.26% | 1.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
This section below was published as a preview of the Bank of Canada rate decision at 08:30 GMT.
- The Bank of Canada is expected to raise interest rates by 25 basis points to 2.50% on Wednesday.
- Canadian employment fell sharply in September, complicating the case for tighter monetary policy.
- Investors will scrutinize the central bank's guidance for clues about further rate increases.
The Bank of Canada (BoC) is expected to raise its benchmark interest rate by 25 basis points to 2.50% on Wednesday, as persistent inflation concerns put pressure on policymakers to tighten monetary policy despite growing signs of economic weakness.
According to a Reuters poll, 19 of 34 economists anticipate a rate hike, which would mark the central bank's first increase since July 2023. However, the decision remains uncertain as recent economic data highlight the challenges facing the Canadian economy.
Canada's Consumer Price Index (CPI) rose 3.1% YoY in September, compared with 3% in August, mainly driven by higher energy prices. Underlying inflation measures, however, eased, suggesting that broader price pressures remain relatively contained. BoC Governor Tiff Macklem has warned that prolonged increases in Oil prices could eventually spread to other goods and services.
Meanwhile, the Canadian labor market deteriorated sharply in September. Employment declined by 68.3K jobs, far below expectations of a 7K increase, following a loss of 41.7K jobs in August. The Unemployment Rate rose to 6.5% from 6.4%, reinforcing concerns about weakening domestic demand.
These conflicting signals have divided economists. BBH and Scotiabank expect a quarter-point rate hike, while TD Securities anticipates that the BoC will wait until December. Standard Chartered also favors keeping rates unchanged, citing subdued underlying inflation and economic weakness.
Beyond Wednesday's decision, investors will closely examine the BoC's updated economic projections and Governor Macklem's comments to assess whether policymakers are preparing for additional tightening or a more cautious approach.
When will the BoC release its monetary policy decision, and how could it affect USD/CAD?
The BoC will announce its monetary policy decision on Wednesday at 13:45 GMT, alongside its updated Monetary Policy Report. Governor Tiff Macklem's subsequent press conference at 14:30 GMT will offer further insights into the central bank's policy outlook.
A 25-basis-point rate hike accompanied by hawkish guidance could support the Canadian Dollar (CAD) and weigh on USD/CAD. Conversely, a hold rates decision or cautious guidance highlighting labor market weakness could undermine the Canadian Dollar and push USD/CAD higher.
In the four-hour chart, USD/CAD keeps a capped near-term tone as it holds just under the horizontal barrier at 1.4055 while remaining below the 200-period simple moving average (SMA) at 1.4108 and the 100-period SMA at 1.4153. The Relative Strength Index (14) at 54.9 has recovered into mildly positive territory, suggesting improving momentum, but price action is still constrained by these overhead averages, limiting upside follow-through for now.
On the topside, initial resistance is located at 1.4055, ahead of the 200-period SMA at 1.4108, with the 100-period SMA at 1.4153 and the nearby horizontal level at 1.4155 forming a broader supply zone higher up. On the downside, immediate support appears at 1.3969, with a deeper floor seen at 1.3910, and a break below this latter level would likely expose further bearish pressure in the short term.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
UOB’s Quek Ser Leang and Lee Sue Ann note AUD/USD has shifted into a slightly higher intraday range after touching 0.7055 in early Asia, with scope to test 0.7060 while major resistance at 0.7070 is seen out of reach and support at 0.7020. On a 1–3 week view, they warn that slowing momentum means a break below 0.6995 would negate prospects for 0.7070 coming into view.
Australian Dollar's gradual rise faces nearby resistance
"24-HOUR VIEW: We expected AUD to “range-trade between 0.7005 and 0.7035” yesterday. AUD then traded within a higher range of 0.7010/0.7040 and closed at 0.7025 (+0.12%). During the early Asian session today, AUD appeared to have popped to a high of 0.7055. Upward momentum is building, but not significantly. From here, there is scope for AUD to test 0.7060. The major resistance at 0.7070 is likely out of reach. Support is at 0.7020."
"1-3 WEEKS VIEW: Following our positive AUD view from the middle of last week, we highlighted yesterday (27 Oct, spot at 0.7020) that “upward momentum is starting to slow, and a break below 0.6995 (‘strong support’ level) would indicate that 0.7070 is not coming into view.” Although AUD popped to a high of 0.7055 earlier, it remains to be seen whether 0.7070 is coming into view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD holds steady as the Canadian Dollar struggles to gain traction after the BoC rate hike.
- The BoC raised interest rates by 25 bps to 2.50%, leaving the door open to further tightening.
- Attention shifts to the Fed’s interest rate announcement, with December hike expectations in focus.
USD/CAD is little changed during American trading hours on Wednesday as the Canadian Dollar (CAD) struggles to benefit from a widely anticipated Bank of Canada (BoC) interest rate hike. At the time of writing, the pair trades around 1.4050 after swinging in both directions in the immediate reaction to the decision.
The BoC raised its policy rate by 25 basis points (bps) to 2.50%. Governing Council said the increase was needed “to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services.”
The central bank also left the door open to additional hikes, saying, “There could be a need to increase the policy rate further, but given uncertainties, the Governing Council agreed to proceed carefully.” The BoC stressed that “the Bank remains committed to maintaining Canadians’ confidence in price stability.”
At the post-meeting press conference, BoC Governor Tiff Macklem said, “Hiking will limit pass-through of higher oil prices,” adding that inflation was “looking less likely to be well-contained.”
Macklem noted that the “policy rate, even with this hike, is low enough that it is not restraining growth.” However, he stressed that “there is no predetermined path for rates,” warning that “uncertainty in US trade and the Middle East could change outlook.”
The updated projections show a longer path back to the 2% inflation target. The BoC expects Consumer Price Index (CPI) inflation to rise to around 3.5% by year-end and average 3% in 2027, a percentage point above its July forecast, before easing to 2% in mid-2028.
Attention now turns to the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT. The US Dollar is holding firm ahead of the decision, with the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, hovering near two-week highs around 102.40.
Policymakers are widely expected to leave interest rates unchanged at 3.75%-4.00% after September’s 25-bps hike. With inflation risks still tilted to the upside, traders will closely watch Fed Chair Warsh’s remarks for clues on a December increase, which markets see as 85% likely, according to the CME FedWatch Tool.
A hawkish hold could support the US Dollar and push USD/CAD higher. A less hawkish tone, however, could prompt traders to scale back December rate hike bets and weigh on the Greenback.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | 0.10% | 0.14% | 0.01% | -0.08% | 1.25% | 0.12% | |
| EUR | 0.06% | 0.16% | 0.21% | 0.07% | -0.02% | 1.31% | 0.18% | |
| GBP | -0.10% | -0.16% | 0.04% | -0.09% | -0.19% | 1.15% | 0.00% | |
| JPY | -0.14% | -0.21% | -0.04% | -0.14% | -0.22% | 1.09% | -0.04% | |
| CAD | -0.01% | -0.07% | 0.09% | 0.14% | -0.09% | 1.23% | 0.11% | |
| AUD | 0.08% | 0.02% | 0.19% | 0.22% | 0.09% | 1.34% | 0.20% | |
| NZD | -1.25% | -1.31% | -1.15% | -1.09% | -1.23% | -1.34% | -1.11% | |
| CHF | -0.12% | -0.18% | -0.01% | 0.04% | -0.11% | -0.20% | 1.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Deutsche Bank’s Chief UK Economist Sanjay Raja judges Chancellor Healey’s United Kingdom (UK) Budget as broadly neutral for the public finances, with an estimated impact of GBP 1.3bn. The package limits tax hikes while boosting investment and easing cost of living pressures. Borrowing is projected to remain sticky and slightly above prior forecasts, leaving a sizeable fiscal hole and difficult consolidation choices ahead.
Neutral fiscal stance with rising risks
"The policy package introduced in the Budget is estimated to have a broadly neutral impact (GBP 1.3bn). But this wasn’t a dull Budget by any means."
"The Chancellor’s mantra heading into the Autumn Budget was to ‘do no harm’, and we think the Chancellor successfully met this objective. The biggest spending spree came via investment."
"To be sure, the tax burden remains on course to hit new post-war highs. Altogether, policy measures are projected to reduce borrowing by around GBP 10bn by the end of the forecast horizon."
"Indeed, public sector net borrowing is expected to stay sticky at 4.2% of GDP this fiscal year and is expected to fall to 3.4% of GDP. The medium-term outlook has borrowing sticking nearly 0.2pp above the Spring Statement projections with borrowing landing at 1.8% of GDP by 2031/32."
"Put simply, there will be a near GBP 25-40bn fiscal hole to fill in the new year. Questions around the backloaded nature of the projected fiscal consolidation will also raise concerns around the credibility of projected fiscal tightening."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s Elias Haddad notes the FOMC is widely expected to keep the Fed funds target range unchanged at 3.75-4.00%, with futures pricing only a small chance of a move. However, a likely 9-3 vote split and Chair Kevin Warsh’s inflation assessment should keep a December hike in play, leaving robust US data and price pressures supportive for the Dollar.
Fed pause but December risk lingers
"Crude oil prices are edging toward recent highs, weighing modestly on bonds. US equity futures are slightly higher. The dollar index (DXY) is firm and within reach of its October 14 intraday high at 102.95."
"The FOMC is expected to keep the Fed funds target range steady at 3.75-4.00% after raising rates 25bps in September (6:00pm London, 2:00pm New York). Calls for patience from several key Fed officials support a pause. Futures market imply only 10% probability of a hike today."
"The FOMC vote split and Fed Chair Kevin Warsh’s assessment of inflation are poised to keep a December hike in play. We lean towards a 9-3 vote to hold, with Beth M. Hammack, Neel Kashkari, and Lorie K. Logan dissenting in favor of a 25bps hike, as they did in July. Warsh is also likely to reiterate that inflation remains too high and underlying inflation pressures have yet to improve meaningfully."
"Bottom line, robust US economic activity and rising price pressures reinforce the Fed’s hawkish bias, keeping rate differentials supportive of USD."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/CAD edges slightly higher on Wednesday despite the Bank of Canada raising interest rates.
- The Bank of Canada increased its policy rate by 25 basis points to 2.50%, in line with market expectations.
- Investors now turn to Thursday's European Central Bank decision, with another rate hike possible in December.
EUR/CAD trades around 1.5640 on Wednesday, gaining 0.06% at the time of writing, despite the Bank of Canada’s (BoC) decision to raise its benchmark interest rate by 25 basis points (bps) to 2.50%. The widely anticipated move provided limited support to the Canadian Dollar (CAD), as investors assess the central bank's cautious outlook for further monetary tightening.
The BoC announced its decision on Wednesday, citing persistent inflationary pressures linked to elevated energy prices. The central bank warned that prolonged increases in energy costs could spread to other goods and services, making inflation harder to contain.
In its monetary policy statement, the BoC highlighted that businesses have so far absorbed much of the increase in input costs. However, recent business surveys suggest that companies could increasingly pass these higher costs on to consumers over the coming year, adding to inflationary pressures.
The central bank also left the door open to further interest rate increases, although policymakers stressed the need to proceed carefully amid considerable economic uncertainty. The BoC noted that longer-term inflation expectations remain well anchored, while several indicators continue to point to excess supply in the Canadian economy.
Uncertainty surrounding Canada's trade relationship with the United States (US) also remains a significant risk to the economic outlook, potentially limiting the central bank's room for further tightening.
Market attention now shifts to BoC Governor Tiff Macklem's press conference. Investors will closely examine his comments for indications of whether additional rate hikes could follow, particularly if elevated energy prices continue to fuel inflation.
Meanwhile, the Euro (EUR) faces its own monetary policy catalyst, with the European Central Bank (ECB) scheduled to announce its interest rate decision on Thursday. The ECB is widely expected to keep its deposit rate unchanged at 2.50%, following a cumulative 50-basis-point increase earlier this year. However, persistent energy-driven inflation has raised questions about whether policymakers could consider another rate hike in December.
Investors will therefore focus on the ECB's assessment of inflation risks and economic growth, as well as any indications regarding the future path of interest rates.
Against this backdrop, the EUR/CAD pair remains caught between two central banks facing similar inflationary challenges. While the BoC's latest rate increase could support the Canadian Dollar, expectations of further tightening by the ECB may help the Euro maintain its resilience.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | 0.11% | 0.14% | 0.01% | -0.18% | 1.22% | 0.16% | |
| EUR | 0.05% | 0.17% | 0.19% | 0.05% | -0.12% | 1.27% | 0.22% | |
| GBP | -0.11% | -0.17% | 0.02% | -0.12% | -0.29% | 1.13% | 0.04% | |
| JPY | -0.14% | -0.19% | -0.02% | -0.13% | -0.31% | 1.07% | 0.01% | |
| CAD | -0.01% | -0.05% | 0.12% | 0.13% | -0.18% | 1.21% | 0.16% | |
| AUD | 0.18% | 0.12% | 0.29% | 0.31% | 0.18% | 1.40% | 0.34% | |
| NZD | -1.22% | -1.27% | -1.13% | -1.07% | -1.21% | -1.40% | -1.03% | |
| CHF | -0.16% | -0.22% | -0.04% | -0.01% | -0.16% | -0.34% | 1.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
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