Preparing for BOC Rate Cuts
Summary
The Bank of Canada(BOC) could be one of the first central banks to cut rates, meaning a weaker CAD. Could USDCAD move off the 15-month range support?
The Details
Canadian inflation is approaching the 2% target, suggesting no further rate hikes by the BOC. Interest rates will then temporarily pause, which could cause CAD indecision.
However, economic data for Canada is weak, signalling recession. A high and climbing unemployment rate strengthens recession fears. Recession may lead to rate cuts - before the US and other Western economies - weakening the CAD over other currencies.
Things to Consider
The Bank of Canada(BOC) could be one of the first central banks to cut rates, meaning a weaker CAD. Could USDCAD move off the 15-month range support?
The Details
Canadian inflation is approaching the 2% target, suggesting no further rate hikes by the BOC. Interest rates will then temporarily pause, which could cause CAD indecision.
However, economic data for Canada is weak, signalling recession. A high and climbing unemployment rate strengthens recession fears. Recession may lead to rate cuts - before the US and other Western economies - weakening the CAD over other currencies.
Things to Consider
- The Bank of England may be one of the last central banks to cut rates. Higher for longer is the current narrative for UK interest rates. Buying opportunities on GBPCAD could be more lucrative.
- The US often leads when it comes to rate changes. However, the US economy is performing well even with the current high rates, meaning Canada (and maybe the EU) may cut rates before the US
