Home USD/CAD Forecast: BOC’s Macklem Sees No Need for More Hikes

USD/CAD Forecast: BOC’s Macklem Sees No Need for More Hikes

  • Macklem said that no additional rate increases would be required if inflation fell.
  • Jerome Powell stated it would take “quite a bit of time” to lower inflation.
  • Macklem stated that it was too early to consider rate cuts.

Today’s USD/CAD forecast is slightly bullish. Tiff Macklem, Bank of Canada governor, stated on Tuesday that no additional interest rate increases would be required if, as anticipated, the economy slowed and inflation declined.

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The central bank has raised interest rates at a record rate, to 4.5% during the past 11 months to control inflation, which was 6.3% in December and remains significantly above the bank’s 2% target. It announced last month that it would delay making new moves until the impacts of earlier increases had time to take effect.

In a speech, Macklem remarked, “If new data is generally consistent with our forecast and inflation declines as expected, then we won’t need to hike rates further.”

Fed Chair Jerome Powell, stated on Tuesday that it would take some time to get American inflation back to the 2% objective.

While his American counterpart talks about the need for additional monetary tightening, the governor of the Bank of Canada is quite content to be watching from the sidelines.

According to the central bank’s survey of market participants on Monday, the median prediction was that borrowing costs would decrease by half a percentage point by the end of the year and further decrease next year.

“It is far too early to think about decreasing rates,” Macklem emphasized. “We are halting interest rate increases while we evaluate whether we have done enough.”

USD/CAD key events today

Investors are not expecting any key economic releases from Canada or the US, so the pair will likely consolidate.

USD/CAD technical forecast: Bears attempt to cross below the 30-SMA support 

USD/CAD technical forecast

The 4-hour chart shows USD/CAD trading at the 30-SMA, which might act as support. The RSI trades below the 50-level, a sign of strong bearish momentum. After a strong bullish move, the price paused at the 1.3450 resistance before bears took over with a strong candle. 

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The price is on the verge of crossing below the 30-SMA. A break below the 1.3350 level could see the price fall to 1.3275. However, the SMA and the 1.3350 level might act as support and allow the previous bullish move to continue.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.