USD/CAD rebounded on Monday, ending a seven-day decline as markets repositioned ahead of Wednesday’s Federal Reserve and Bank of Canada policy decisions. The pair was trading near 1.4023 after sliding to 1.3969 on Friday, its weakest level since 16 September. The US Dollar Index was around 101.87, recovering from last week’s 101.45 trough as demand for the Greenback steadied into the midweek event risk.
Policy Expectations for Fed and Bank of Canada
Expectations are split across the border. Markets are pricing a 25-basis-point hike from the Bank of Canada, which would be its first increase since July 2023, while the Fed is expected to hold after a 25-basis-point rise in September. The BoC also publishes its quarterly Monetary Policy Report with updated growth and inflation projections, and trading will focus on guidance around the timing and pace of any further tightening.
Upcoming Economic Data Releases
The calendar is busy: Tuesday brings US ADP Employment Change four-week average, Durable Goods Orders, Consumer Confidence and New Home Sales; Thursday features PCE, third-quarter GDP and weekly Initial Jobless Claims; and Canada releases August GDP on Friday.
