Yesterday, the Bank of Canada kept rates unchanged at 2.25%.
Key points from the Bank of Canada statement:
BoC held the policy rate at 2.25%, maintaining a steady stance as inflation remains near target and the economy continues to adjust to global trade disruptions.
Global conditions remain mixed: major economies are resilient despite US trade protectionism, with strong US consumption and AI investment, firmer-than-expected euro-area growth, and continued weakness in China’s domestic demand.
Canada’s Q3 GDP surprised to the upside at 2.6%, but this strength was driven by volatile trade flows; underlying domestic demand was flat, and overall GDP is expected to weaken in Q4.
Labour market shows tentative improvement, with employment gains over three months and unemployment falling to 6.5%, though trade-sensitive sectors remain soft and hiring intentions subdued.
Inflation remains near target, with CPI at 2.2% and core measures between 2½% and 3%; underlying inflation is assessed around 2½%, and near-term CPI will be noisy due to last year’s GST/HST holiday effects.
Policy stance deemed appropriate, with the current rate viewed as the right level to keep inflation close to 2% amid structural trade adjustments; BoC remains ready to respond if the outlook deteriorates.
In his opening statement, Governor Tiff Macklem said the Bank of Canada emphasize 5 key points:
5 key bullet points from BOC Macklems opening statement:
BoC held the policy rate at 2.25%, judging it appropriate to keep inflation near 2% during a period of structural trade adjustment.
US tariffs are hitting key sectors, but the overall Canadian economy remains more resilient than expected.
CPI inflation stays contained near 2%, with core around 2½–3%, and temporary near-term volatility expected.
Labour market shows modest improvement, though hiring intentions and trade-sensitive sectors remain weak.
Elevated uncertainty—especially US trade policy and CUSMA review—means the BoC is prepared to respond if the outlook shifts.
USDCAD Slides as Sellers Regain Control After Failed Test of Key Technical Levels
Following the Bank of Canada decision, USDCAD initially moved higher, but the upside momentum stalled at the 100-hour moving average, where buyers quickly turned into sellers. That shift pushed the pair back below the 50% retracement of the rise from the mid-June low, a key technical level at 1.3839. The Fed decision later reinforced the downside momentum, driving the pair to a post-announcement low of 1.37989, just under the 1.3800 psychological level.
During today’s Asian session, USDCAD attempted a rebound, climbing toward Tuesday’s low near 1.3823, but sellers again defended the level and forced another rotation lower. The pair has now pushed to a fresh low and is testing the 61.8% retracement of the entire move up from the mid-June low at 1.37684. A decisive break below this Fibonacci support would open the door toward a major swing-area floor between 1.3720 and 1.37257, defined by three separate lows from August through September — a zone where buyers previously stepped in to halt declines.
Sellers in control, but testing a key target retracement level.
Video Analysis: USDCAD Technical Bias, Targets, and Risk
In the video above, I (Greg Michalowski, author of Attacking Currency Trends) outline the key levels in play for the USDCAD and define (and show/explain) the bias, the targets and the risk from a technical perspective. Watch the full breakdown in the video above.
Be aware. Be prepared.
