USDCAD holds as BoC may go dovish
As the Bank of Canada could offer lower-sized interest rate rises, the Canadian dollar may slip. Although inflation remains high in October, signs that it is peaking could indicate a slower pace for tightening. The central bank has now focused on fine-tuning and not exceedingly raising the terminal rate. If this happens, it could lead to recessionary conditions. In the future, the BoC may increase the BoC’s interest rate by small amounts. It would surprise 50bp that the upside risk to the loonie is 50bp. The pair is expected to rebound. 1.3800. 1.3250 The first support.
As recession risk recedes, AUDUSD rises
As signs of inflation peak continue to lift riskier currencies, the Australian dollar continues to rise. In October, the Australian monthly CPI rose 6.9%, down from 7.3% in September. It was helped by a sharp decline in prices for fresh produce and holidays. The RBA had expected prices to reach about 8% by the year’s end, but more signs that inflation might be peaking could be a pleasant surprise for policymakers. The RBA expects that tightening will be halted by the end of the year, which could help to bring the growth-sensitive Aussie back on track.