Canadian Dollar makes fresh headway following another Fed rate cut
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The Canadian Dollar (CAD) found fresh 11-week highs against the US Dollar (USD) on Wednesday. The Bank of Canada (BoC) held interest rates steady, while the Federal Reserve (Fed) delivered its third straight interest rate cut, propping up the Loonie and sending the Greenback lower. The BoC held rates flat once again, with BoC Governor Tiff Macklem reiterating patience-based rhetoric that pushed back on market expectations for possible interest rate cuts in the future. Despite markets clamoring for cheaper funding costs through lower interest rates, the BoC remains leery of dropping interest rates any further. The Fed delivered a third straight interest rate cut, giving investors what they wanted, however Fed Chair Jerome Powell cautioned against expectations for further rate moves in the near term, with the Federal Open Market Committee (FOMC) broadly seeing room for only 50 basis points in further rate reductions across 2026 and 2027. Daily digest market movers: Canadian Dollar climbs on Fed rate cuts The Canadian Dollar’s midweek gains pushed the USD/CAD pair into an eleven-week low, testing below 1.3800 for the first time since September. The BoC held interest rates at 2.25%, while the Fed eased its policy rate band to 3.75-4.00%. The Fed also announced an uptick in Quantitative Easing (QE) programs including bond purchasing. The BoC’s stubborn rate announcement comes the week before key Canadian Consumer Price Index (CPI) inflation figures are due. Next Monday, Loonie traders will get to see how right the BoC was to keep rates on hold. Despite a third straight interest rate cut, Fed Chair Jerome Powell cautioned markets against hoping for any further extreme moves from the Fed, at least as long as he’s still the Chair, which ends early next year. Canadian Dollar price forecast From the momentum perspective, USD/CAD is showing clear downside pressure.…
Filed under: News - @ December 10, 2025 11:28 pm