On Wednesday, July 24th at 21:45 Beijing time, the Bank of Canada will hold an interest rate decision. In a survey conducted from July 16th to 19th, nearly three-quarters of the surveyed economists (22 out of 30) expected that the Bank of Canada will cut interest rates by 25 basis points this week, lowering the rate to 4.50%, and are expecting inflation to continue to decline. The surveyed economists also predict that the Bank of Canada will pause its easing cycle at the September meeting, and then resume cutting rates in October and December. This means that the Bank of Canada will cut interest rates twice before the Fed begins its easing cycle. Currently, the market generally expects the Fed to begin its easing cycle in September.
The surveyed economists also predict that the Bank of Canada will pause its easing cycle at the September meeting, and then resume cutting rates in October and December. This means that the Bank of Canada will cut interest rates twice before the Fed begins its easing cycle. Currently, the market generally expects the Fed to begin its easing cycle in September.
Andrew Kelvin, managing director of Canadian and global interest rate strategy at TD Securities, said that second-quarter CPI inflation is "tracking well below the [Bank of Canada's] April forecast," and that business outlook surveys are extremely modest. "The case for another rate cut at the Bank of Canada's next meeting is clearly in play."
"The Bank of Canada has made it clear that it only intends to gradually loosen policy, and we believe that in the short term, the bank will still pay more attention to upward inflation risk than downward risk," said Tony Stillo, head of the Canadian economy at Oxford Economics. "If inflation fails to slow as we expect, the Bank of Canada may postpone further easing and keep policy rates higher for longer."
Meanwhile, Canada's easing of inflation has exceeded expectations, leaving room for a rate cut in July. Worse still, May's retail sales figures in Canada, which were far lower than expected, clearly show that the economy is collapsing due to high rates. Therefore, the Bank of Canada has every reason to cut interest rates.
Forex analyst Saqib Iqbal pointed out that from a technical perspective, the USD/CAD is trading above the 22-day moving average, and the relative strength index has risen to above 50, indicating that the bulls are in control.
The USD/CAD has remained in the range between the support of 1.3600 and the resistance of 1.3750. Therefore, the exchange rate must break through this range to show the next trend. Due to the dominance of the bulls, the exchange rate may challenge the range resistance. Breaking through this level will bring the price back to the key level of 1.3900. However, if it fails to break through, the USD/CAD may continue to consolidate.
USD/CAD Daily Chart
At 10:23 Beijing time on July 22nd, the USD/CAD was quoted at 1.3731/32.