Why the Canadian Dollar's rebound isn't just about rate-hike bets
The Canadian Dollar (CAD) has become the focus of debate over the Bank of Canada's (BoC) next policy move.
The Canadian Dollar (CAD) has become a focal point in discussions surrounding the Bank of Canada's (BoC) next policy move. Market sentiment has shifted towards the likelihood of a rate hike at the upcoming meeting, causing USD/CAD to plummet to 1.4071, a significant drop from the 1.4300 peak reached on October 14. MUFG suggests that the BoC is likely to act, possibly with an additional rate hike in December.
Conversely, Standard Chartered maintains that the market's tightening expectations are overstated, anticipating the BoC to maintain its policy rate at 2.25% through the end of 2026 and 2027. RBC's survey findings highlight why this hawkish re-pricing is occurring: Canadian inflation expectations are rising rapidly, coinciding with the collapse of trade talks between Canada and the US. The next step for the CAD hinges on whether the BoC validates the rate-hike assumptions.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
