Usdcad Trades At Highs

Usdcad Trades At Highs by Andrew Blumer last updated on March 28, 2025

Usd/Cad Trades At Highs Near 1.3829

USD/CAD continues to trade in green for the 10th day in a row and appears to be green on Tuesday. The pair has gained almost 2.7% and has found a peak near 1.3829.

The recent bout of strength in the USD/CAD comes due to the temporary weakness of the Canadian Dollar (CAD). This is because the latest inflation data from Canada was weaker than expected.

Canadian Cpi Declines To 1.6%

The data showed that CPI declined to around 1.6% on an annual basis in September. August's inflation print was 2.0%. The Canadian CPI was also below the forecast of 1.8%.

After the release of the Canadian inflation, the prospects of more rate cuts from the Bank of Canada (BoC) have increased. It is important to note that the central bank has already cut the rates three times by 0.25% each time. With the forecast of yet another rate cut by the BoC, the Canadian Dollar (CAD) has come under pressure.

The initial reaction of USD/CAD to the CPI data was to move higher, but all of the gains were quickly reversed. However, the pair resumed its rally once again due to the strength of the US Dollar.

As far as the Fed is concerned, the chances of aggressive rate cuts are very low... In simple words, we may not get a 0.50% rate cut in November.

All of this has also provided reassurances to the traders that the US economy is still strong and far away from recession. As of Tuesday, the chances of a 25 bps rate cut were 90%, while the chance of no rate cut was 10%.

Meanwhile, other data showed that the core CPI of BoC jumped by 1.6% in September from August's reading of 1.5%. Over all, the recent inflation numbers from the Canada showed a decline which was not received well by the Canadian Dollar (CAD).

Looking ahead, the USD/CAD may move lower due to the political uncertainty in the USA ahead of the November elections.