USD/CAD: BOC cuts the policy 25bps to 2.75% – BBH

FXStreet Insights Team FXStreet

The Bank of Canada (BOC) delivered on expectations yesterday and cut the policy 25bps to 2.75%. The BOC warned that the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest, BBH FX analysts report.

BOC to bring down the policy rate below neutral settings

"As such, unless the trade dispute is fully resolved, the BOC will likely bring down the policy rate below neutral settings which is a drag on CAD. The BOC’s neutral range estimate is between 2.25% to 3.25%. The April Monetary Policy Report will include an update to that estimate. Markets imply an additional 75bps of easing over the next 12 months and the policy rate to bottom at 2.00%."

"BOC Governor Tiff Macklem confirmed there was no consideration for a 50bps rate cut. Instead, Macklem’s opening statement stressed 'Governing Council will proceed carefully with any further changes to our policy rate given the need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand'."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD eases to near 1.1650, eyes US PCE for fresh impetus

EUR/USD turns south to test 1.1650 in European trading on Friday, facing rejection once again near seven-week highs. The pair, however, continues to draw support from persistent US Dollar selling bias, despite a cautious market mood. Traders now await the US September PCE inflation and UoM Consumer Sentiment data.

GBP/USD holds gains near 1.3350 ahead of US data

GBP/USD sticks to a positive bias near 1.3350 in the European session on Friday. Traders prefer to wait on the sidelines ahead of the key US inflation and sentiment data due later in the day. In the meantime, broad-based US Dollar weakness helps the pair stay afloat.

Gold remains below $4,250 barrier as traders await US PCE data for directional impetus

Gold gains some positive traction on Friday, though it remains confined in the weekly range. Dovish Fed expectations continue to undermine the USD and lend support to the commodity. Bulls, however, might opt to wait for the US PCE Price Index before placing aggressive bets.