USDCAD Breaks Above 1.39 after Comments from BOC Gov Macklem

USDCAD opened on a bullish foot today and broke above 1.39 as the USD continued to push higher, while the CAD remains one of the weakest currencies. Despite the slowdown in the bullish momentum in the last two weeks, buyers remain in charge and moving averages continue to hold as support, helping buyers push the price further to the upside.

Despite U.S. economic growth, as highlighted by Jamie Dimon earlier, the Canadian dollar is struggling as one of the weakest major currencies due to persistent signs of economic softness, which Bank of Canada (BOC) Governor Tiff Macklem acknowledged today. Following the BOC’s recent 50-basis-point rate cut and dovish tone, USD/CAD has stayed bullish, rising around 5 cents in the past month to approach 1.39, with moving averages on the H4 chart providing solid support.

USD/CAD Chart H4 – The 50 SMA Holds As Support

With the latest rate cut, markets are now pricing in a 25-basis-point reduction at the BOC’s next meeting and even a 25% likelihood of another 50-basis-point cut, underscoring continued CAD weakness. In contrast, the Federal Reserve isn’t expected to cut rates by 50 basis points again anytime soon, which has bolstered sentiment for the USD this month, shifting it from bearish to bullish.

Meanwhile, U.S. economic indicators remain strong, with October’s flash PMI data reflecting solid activity in both manufacturing and services sectors and an estimated 2.5% annualized GDP growth. New orders also hit their highest point in nearly 18 months, signaling a rise in demand and reinforcing the USD’s appeal against the CAD.

Comments from the Bank of Canada Governor Macklem

• Productivity is key to raising Canada’s living standards
• We will have to discover the neutral rate over time

China’s economic performance is likely to fall short of expectations, while Canada’s economy continues to show signs of strain. With the Bank of Canada holding rates at 3.75% after last week’s cut, both the job and housing markets are visibly weakening, setting a cautious tone for economic growth.

Although the Bank of Canada should ideally accelerate rate cuts to ease economic pressure, it’s expected to proceed cautiously, which could prolong and worsen the current downturn. While moderate growth is anticipated over the coming years, a recession may still be avoidable. As this outlook becomes clearer, the Canadian dollar (CAD) is projected to weaken further, potentially pushing USD/CAD to 1.40 and beyond.

USD/CAD Live Chart