USD/CAD Outlook (26 October 2022)

The USDCAD retraces from the recent high to trade at the 1.3660 support level. This move lower is driven by the weakness of the DXY and also respects the downward trendline.

Tomorrow, the Bank of Canada is due to release its decision with regards to the interest rates. Markets are expecting an increase of 75bps to take the interest rate to a high of 4.00%

The last interest rate hike on the 7th of September saw the USDCAD fall briefly. This is a likely scenario again, with the price likely to fall toward the 1.35 support level.

Comment:

Bank of Canada increased interest rates by 50bps (instead of 75bps). Taking interest rates to 3.75% (instead of the market expectation of 4%)

Hence the reason why the USDCAD bounced from the 1.35 level, and is climbing above 1.36, despite the DXY weakness