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The Bank of Canada cut rates by 50 bps today, which represents a downside shock relative to market expectations, analysts at TD Securities report. USD/CAD trades at 1340 after escalating with the news.

Key quotes

“The Bank of Canada cut rates by 50bps at the March policy meeting, opting for a more proactive approach relative to a forecasting community that was divided between a 25bp or 50bp cut.” 

“We continue to look for another 25bp cut in April. Additionally, we think the odds favour an additional 25bp rate cut in June.”

“We think USD/CAD is unlikely to mark new ground. Things should settle ahead of the recent highs of 1.3465, especially as we expect another Fed cut at the March meeting.”