Loonie Slips Amid BoC Rate Cut Expectation

Fundamental Analysis

* Rate Cut In Sight: The Canadian Dollar continue to weaken against the dollar as the Bank of Canada is expected to cut interest rates. BoC Governor Tiff Macklem opened doors for another 50 basis points (bps) interest rate reduction in December. “We’ve demonstrated we’re prepared to do a 50-basis-points cut if we think that’s appropriate. And if we think it’s appropriate to do it again, we’ll do it again,” Macklem told to Senate Committee on Wednesday. Macklem emphasized the need to lower interest rates unless he sees surprises from economic developments. The BoC also reduced its interest rates by 50 bps to 3.75% in its policy meeting in October.

Technical Analysis

* Technical Breakout: USDCAD was traded higher following prior rebound from the support level 1.38875. MACD which illustrate diminishing bearish momentum signal suggest the pair to likely further extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.40300. Conversely, a potential reversal is also to be expected and the price could head back towards 1.37400 after it breach back below the level 1.38875.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Looking ahead, attention now turns to this week’s U.S. presidential election, where Democratic candidate Kamala Harris and Republican nominee Donald Trump are in a tight race across seven key battleground states, with just days remaining before the vote.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Canada data, updates on the U.S. Presidential Election, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.