USD/CAD Outlook: Loonie Surges Amid BoC’s Cautious Tone…

• The Financial institution of Canada shifted to a extra hawkish tone that boosted the Canadian greenback.

• The greenback was weak after US inflation information got here in step with expectations.

• Merchants elevated the chance of a December Fed fee lower from 85% to 97%.

The USD/CAD outlook exhibits a stronger loonie after Wednesday’s Financial institution of Canada coverage assembly, the place policymakers struck a barely cautious tone. In the meantime, the greenback was fragile as US inflation figures supported bets for a December Fed fee lower. 

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The Financial institution of Canada lower charges by 50-bps on Wednesday however shifted to a extra hawkish tone that boosted the Canadian greenback. Markets had anticipated a large fee lower. Nevertheless, the end result ought to have weakened the Canadian greenback. 

However, the central financial institution governor mentioned that future fee cuts will doubtless be gradual, hinting at a cautious outlook. Furthermore, he famous that the threats of excessive tariffs on Canadian exports to the US have created uncertainty concerning the outlook for the financial system. In the meantime, consultants imagine the tariffs will immediate the Financial institution of Canada to additional decrease borrowing prices. Tariffs will damage the financial system, piling stress on policymakers to spur progress. 

Alternatively, the greenback was weak after US inflation information got here in step with expectations, boosting bets for a December Fed fee lower. The CPI elevated by zero.three% in November, above the earlier studying of zero.2%. In the meantime, the annual determine elevated by 2.7%, above the earlier studying of two.6%. Nevertheless, because it was in step with forecasts, merchants elevated the chance of a December fee lower from 85% to 97%, weighing on the dollar. 

USD/CAD key occasions at this time

• US core PPI m/m
• US PPI m/m
• US unemployment claims

USD/CAD technical outlook: Bulls corrected to retests 30-SMA

On the technical facet, the USD/CAD value has pulled again to the 30-SMA help after making new highs above the 1.4150 resistance degree. Nevertheless, the uptrend stays intact because the value continues to be on the higher facet of the SMA. On the identical time, though bears have pushed the worth decrease, it has been a weak transfer with small-bodied candles and wicks. Subsequently, it’s doubtless a short corrective transfer. 

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If bulls resurface on the 30-SMA, the worth will bounce increased to focus on the 1.4201 key degree. A break above this degree would make a brand new excessive, persevering with the bullish pattern. A reversal will solely happen if bears breach the 30-SMA and begin making decrease highs and lows.

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