Canadian Dollar eases from six-week high ahead of Fed, BoC rate decisions

The Canadian Dollar experienced a decline on Friday, reaching its weakest level since September 16 at 1.3969. However, on Monday, the pair rebounded to around 1.4023, after previously falling to a six-week low of 1.3969. The US Dollar Index (DXY) also showed a recovery, moving to around 101.87, following a low of 101.45 the previous week.

The Bank of Canada (BoC) is expected to increase interest rates by 25 basis points, the first hike since July 2023, while the Federal Reserve (Fed) is anticipated to pause after raising rates by 25 basis points in September. BoC Governor Tiff Macklem recently indicated that high energy prices will lead to a significant upward revision in the bank's inflation forecasts.

As both central banks release their interest rate decisions and reports on Wednesday, traders are closely watching their statements for hints about future rate hikes. The Canadian Dollar may benefit from the BoC's more aggressive stance, potentially raising rates multiple times by the end of next year. Meanwhile, economic data releases from the US and Canada this week include the ADP Employment Change, Durable Goods Orders, Consumer Confidence, New Home Sales, US PCE report, third-quarter GDP, and Canadian GDP data on Friday.