Bullish Reversing Signs in USD/CAD, BOC Sees Rate Cuts in Late 2023

USD/CAD has been on a downtrend since the middle of October, as the USD started to retreat on a softening FED talk, after a really strong year. Asa result, highs have been getting lower on the daily chart, but this pair has formed a support zone where the previous resistance used to be, just above 1.32.

Last month we saw another attempt by the sellers as the USD decline resumed. But, while the USD made new lows against other main currencies, the decline in USD/CAD stopped short and we saw a reversal last week above the November lows. That was a bullish sign for this pair and now this pair is around 200 pips above the previous lows.

Now buyers are facing two moving averages bove on the H4 chart. The Bank of Canada is also slowing with rate hikes, which will start weighing in on the CAD, besides the decline in crude Oil. The BOC sees negative GDP growth in 2023, while they are also mentioning rate cuts, which should keep the CAD bearish and this pair bullish.

Bank of Canada Q4 Survey of Market Participants

• BOC survey sees negative GDP growth in 2023 with rates falling 50 bps by year-end
• Median GDP for 2023 at -0.4%
• GDP of +2.0% in 2024
• Accumulated savings and commodity prices are main upside risks
• Weaker housing and tightening financial conditions are main downside risks
• Median CPI forecast of 2.9% this year and 2.2% in 2024
• Median response for year-end BOC overnight rate is 4.00% (currently at 4.50%)
• Median response for Q4 2024 is 3.00%
• CAD/USD seen at 0.74 at year-end (1.35)
• WTI crude oil seen at $85 at year-end
• Full survey

The Bank of Canada does a quarterly survey of market participants and this offers a decent look at where the consensus is.

USD/CAD Live Chart

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Canada Elections 2025: Will Political Shifts Send USD/CAD Soaring or Crashing?

2 weeks ago

Save

April 17 FX Signals: Can an ECB Hawkish Cut Crash DAX and Boost the Euro?

3 weeks ago

Save

Will a Surprise BoC Rate Cut Push USD/CAD Past 1.40?

4 weeks ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments