On Wednesday (December 6), USD/CAD fell to 1.3598, a drop of 0.03%. The Bank of Canada is set to raise rates by another 50 basis points, but there are still two fronts that could allow it to scale back.
The latest from the Bank of Canada:
First, given the sequential slowdown in underlying inflation, the Bank of Canada may see sufficient reason to raise rates by only 25 basis points. Second, it is expected that the Bank of Canada may soon pause (hike cycle), which may be signaled by a subsequent statement or press conference. The loonie has held steady this year amid the Bank of Canada’s aggressive rate hike cycle, but has lagged other G10 currencies recently. This is mainly related to lower oil prices and lower yields.
USD/CAD technical analysis:
USD/CAD bulls took a breather near weekly highs during Tuesday’s Asian session as quotes fell to 1.3585. In doing so, the pair of loons took cues from overbought RSI conditions to challenge the latest upward trajectory.