USD/CAD rebounds from 1.3900 as the Canadian Dollar weakens on expectations that the BoC will deliver another 50-bps interest rate cut.
The likelihood of tough competition between Kamala Harris and Donald Trump for presidential elections has weighed on the US Dollar.
The Fed is expected to cut interest rates by 25 bps on Thursday.
The USD/CAD pair recovers half of its intraday losses after discovering significant buying interest around the key support of 1.3900. The Loonie asset bounces back despite the US Dollar (USD) remaining vulnerable against its major peers, suggesting sheer weakness in the Canadian Dollar (CAD).
The CAD remains on the backfoot as the Bank of Canada (BoC) is expected to cut interest rates further in the last monetary policy meeting of the year in December. 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.
For more interest rate guidance, investors will pay close attention to BoC's Summary of Deliberations and the minutes of the policy meeting of October, which will be published on Tuesday.
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