Experts Predict Movements of Canadian Dollar Pair After Bank of Canada Rate Hike

After the Bank of Canada surprised the markets with its decision to raise interest rates by 25 basis points yesterday, Wednesday, economists at ING Bank issued new expectations for the Canadian dollar pair in light of these decisions and the possibility of raising interest again next July.

In this context, experts from the Dutch Bank saw that the Bank of Canada’s interest rate hike led to a decline in the USDCAD pair, as the pair is currently testing its lowest levels since November 2022 at 1.32 points and 1.33 points, and the pair is expected to gain support near the 1.30 point level.

Likewise, economists of the European Banking Group suggested that the Canadian dollar pair would reach the level of 1.30 points this summer, and that the negative re-evaluation of growth expectations in the United States and the expected interest cuts by the US Federal Reserve in late 2023 could negatively affect the Canadian dollar, and therefore the Tightening monetary policy by the new Bank of Canada means that the Canadian dollar pair may trade near the level of 1.25 points by the end of this year.

It is noteworthy that earlier, economists at Commerzbank expected a slight decrease in the movements of the Canadian dollar pair in light of the possibilities of a limited recovery of the Canadian dollar against its US counterpart, especially with the Canadian dollar benefiting from the Bank of Canada’s hawkish tone of statements, in addition to the possibility that the US Federal Reserve is close to ending Critical stress cycle.

And the economists of the German bank continued that they see increasing possibilities for a limited recovery of the Canadian dollar against the US dollar due to the strong economy in Canada, and therefore it is likely that the Canadian dollar will benefit if the Canadian interest rate approaches the US interest rates.

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