All eyes on the Bank of Canada

The Canadian dollar has edged lower on Wednesday. In the European session, USD/CAD is trading at 1.3686, up 0.25%. December has started on the wrong foot, as the Canadian dollar is yet to post a winning session.

Will BoC push the 25 or 50 button?

The Bank of Canada hasn’t hesitated to put the rate pedal to the floor, as it continues to battle high inflation. In July, the BoC raised rates by a full point but has been gradually easing since then, delivering a 75 bp hike followed by a 50 bp increase. Will the easing trend continue at today’s policy meeting? The markets have priced in a 72% likelihood of a 25 bp move, which would bring the cash rate to an even 4.0%. A 50-bp hike would be considered a surprise hawkish move and would likely give the Canadian dollar a boost.

The previous meeting in October was also live, with a 50/50 split over whether the BoC would raise rates by 50 or 75 bp. In the end, the BoC opted for the smaller hike, with Governor Macklem warning that he expected a ‘significant slowing of the economy to occur’. Investors will be keeping an eye on the rate statement and Macklem’s follow-up presser to see if his view has changed or not. Inflation was unchanged in October at 6.9% but is well below the 8.1% clip in June. Macklem’s comments about the health of the economy and the direction of inflation could affect the movement of the Canadian dollar.

With the New Year just around the corner, what can we expect from the BoC in 2023? The terminal rate is projected at around 4.5%, which would mean several more rate hikes early next year. Of course, rate policy will be heavily dictated by key data such as employment, consumer spending and inflation. In addition, the BoC will want to keep pace (or close to it) with the Federal Reserve, which is widely expected to raise rates by 50 bp next week, to prevent the Canadian dollar from falling further.


USD/CAD Technical

  • There is resistance at 1.3762 and 1.3879
  • USD/CAD has support at 1.3619 and 1.3502

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.