Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3850-1.4100
Euro 1.6090-1.6340
Sterling 1.8300-1.8550
WTI Oil (opening level) $60.15
The CAD/USD is opening at 1.3976 ( 0.7155 )
USD/CAD holds around its 200-day moving average after the Bank of Canada delivered a 25bps policy rate cut to 2.25%. The BOC highlighted a soft labour market and US trade uncertainty but signaled it is unlikely to ease further, while expectations of Canadian budget that will stimulate the economy, we still have firm inflation that will affect the CAD to the negative
Headlines
· The Bank of Canada cut its benchmark rate by 25bps to 2.25% and may end cutting if the economic outlook remains stable. This follows a previous rate cut amid US tariffs and a slowing job market. Despite a 1.6% GDP contraction in Q2 due to trade conflicts, the BoC expects GDP to grow by 1.2% this year and 1.1% next year, with core inflation around 3% moving toward the target.
· The Federal Reserve cut the federal funds rate by 25 bps to 3.75%–4.00%, the lowest since 2022, due to employment risks and high inflation. Governor Miran preferred a 50bps cut; Kansas City Fed's Schmid dissented against the cut. Chair Powell said a December cut isn't certain, but investors expect another 25bps reduction. The Fed will stop reducing securities holdings (a.k.a., quantitative tightening) on December 1.
· The Bank of Japan policy board left its benchmark interest rate unchanged at 0.5% in a vote that offered no new hints on when it might hike, with the next meeting not scheduled until 19 December.
· President Trump said he had an “amazing meeting” with President Xi that produced a deal to halve fentanyl-related tariffs, resume Chinese soybean purchases, and suspend the rare-earths licensing regime for a year. He added that China would boost U.S. investments and curb precursor chemical flows linked to fentanyl production. The subsequent response from China confirmed much of what Trump said, as China announced a suspension of rare earth export controls for a year, on expanding agricultural trade and also on suspending countermeasures against US ships docking at Chinese ports.
· The gold and silver comeback faltered yesterday, with Gold pushing back as low as 3,915 after yesterday’s high of 4,030, before rebounding to 3,970 area, with silver showing similar behaviour, trading 47.80 after a high yesterday of 48.45.
Key Points
· Equities: U.S. mixed at record levels as a 25bp Fed cut and QT halt met a hawkish Powell, Europe steady with UK firmer on earnings; Asia mixed.
· Volatility: VIX steady near 16 as markets digest Fed cut and GDP data
· Digital Assets: Bitcoin steady near $110k, Ether around $3.9k, IBIT and ETHA under mild pressure amid ETF outflows
· Fixed Income: US Treasury yields jump on surprising Fed hawkishness
· Currencies: JPY weak across board on dovish BoJ. USD rally on hawkish Fed fizzles.
· Commodities: Gold and silver comeback falters. Soybeans sideways as China resumes buying.