USD/CAD soars close to 1.3800 as BoC keeps interest rates unchanged at 5%
- The USD/CAD pair jumps vertically to near 1.3800 as the BoC keeps interest rates steady at 5%.
- An interest rate decision from the BoC was widely anticipated.
- The oil price drops oil price as Israel’s ground assault in Gaza delays for safe dispatch of humanitarian aid.
The USD/CAD pair surges to near 1.3800 as the Bank of Canada (BoC) has kept interest rates unchanged at 5%. BoC Governor Tiff Macklem announces a neutral interest rate decision for the second time in a row.
A neutral monetary policy announcement was widely anticipated by the BoC as inflation in Canada is consistently softening and labor market conditions are easing. The Canadian economy is operating at 3.8% inflation, which is almost double the desired rate of 2%.
The S&P500 opens on a bearish note amid volatility prompted by quarterly earnings and persistent fears of widening conflicts in the Middle East. The risk profile is downbeat as expectations of Iran’s intervention in the Israel-Palestine conflict are alive.
Meanwhile, the US Dollar Index (DXY) gathers strength for a fresh move above the immediate resistance of 106.50. The USD Index regains traction as investors shift focus to the crucial US economic readings this week. The release of the US Q3 Gross Domestic Product (GDP) and core Personal Consumption Expenditure (PCE) inflation for September could impact the interest rate decision by the Federal Reserve (Fed), which will be announced on November 1.
As per the expectations, the US economy grew by 4.2% in the July-September quarter, almost double the growth rate registered in the same period in 2022. An upbeat GDP report could escalate hopes of one more interest rate increase from the Fed.
On the oil front, the oil price delivered a bearish closing for three trading sessions in a row as Israel’s ground assault in Gaza was delayed for the safe dispatch of humanitarian aid.