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2025-10-29 11:11:59
[USD/CAD Hits One-Month Low Amid Fed and Bank of Canada Decisions] 1. The USD/CAD pair continued to decline in Asian trading on Wednesday, hitting a low of 1.3931, matching the near one-month low reached on October 8, a drop of about 0.1%. This marks the third consecutive day of decline for the pair, primarily driven by a weaker US dollar, as the market awaits the Federal Reserve's policy decision that day. 2. The Federal Reserve is expected to cut interest rates by another 25 basis points at its October meeting, bringing the benchmark rate to 3.75%-4.00%. According to the CME FedWatch Tool, the market has fully priced in this rate cut and believes there is a 91% probability of another rate cut in December. Traders are particularly focused on Fed Chairman Jerome Powell's comments on the future pace of easing. A CNBC October survey indicated that the Fed may cut rates further in the next two meetings. 3. The US dollar received some support from the upcoming meeting between US President Trump and Chinese President Trump on Thursday. If the two sides reach a framework agreement, potentially suspending US tariffs and export controls, this would further boost the dollar. 4. The Bank of Canada is also expected to cut interest rates by 25 basis points later on Wednesday. However, the outlook for Canadian interest rates is relatively optimistic, with its policy rate of 2.25% still offering a positive real yield relative to the 2.4% CPI. Analysts expect this rate cut may mark the end of the easing cycle, and the central bank may shift to a neutral or hawkish stance to address moderate inflation and high unemployment.
