empty
25.04.2025 12:59 AM
Canada Awaits Election Results. USD/CAD Outlook

Last week, the Bank of Canada kept its interest rate unchanged at 2.75%, as expected. The accompanying statement was neutral in tone, emphasizing ongoing uncertainty. Confidence is hard to maintain when U.S. President Donald Trump once again made disparaging comments about Canada. He suggested that auto tariffs might be increased, supported by the bizarre claim that the U.S. subsidizes Canada by 200 billion dollars a year.

Nevertheless, the markets reacted little to the statement, and the Canadian dollar has remained steady despite expectations. There is still a chance that the Bank of Canada will be forced to cut the rate at its next meeting in June, but forecasts will inevitably be revised after the April 28 elections. The frontrunner is former Bank of England Governor Mark Carney, appointed by the monarch to stand up to Trump—so a serious showdown over tariffs and broader trade relations appears likely, and the outcome is far from certain.

Last week, Carney published his "Plan to Defend Against Trump" and called it his campaign platform. At the top of the agenda is raising defense spending to 2% of GDP, including to counter China and Russia in the Arctic. The economic portion of the plan remains vague, suggesting it's still being negotiated. Accordingly, everything is subject to change—and could change quickly—making forecasts for the CAD's future trajectory unstable.

The speculative short position on the CAD dropped significantly—by 2.35 billion to -6.0 billion—allowing the estimated fair value to dip below its long-term average.

This image is no longer relevant

The Loonie is consolidating just above the support zone at 1.3680/3700. Last week, we suggested that trading would enter a sideways range after forming a base. However, recent trends have increased the likelihood of further declines. We expect an attempt to break below this support zone toward the 1.3410/30 area, which would have seemed far-fetched recently, especially considering Canada was the first country targeted by the U.S.'s new trade policy. Yet, market reaction suggests that investors see a strong chance that Canada will defend its position. If there's a pullback toward the nearest resistance zone at 1.4010/20, we anticipate a resumption of selling.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

What to Pay Attention to on May 14? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Wednesday. The only item of note is the second estimate of Germany's Business Activity Index for April. Second estimates typically

Paolo Greco 06:11 2025-05-14 UTC+2

GBP/USD Overview – May 14: Only the Trade Deal Matters

On Tuesday, the GBP/USD currency pair also ended what could only be called disgrace — its decline. On Monday, the U.S. dollar strengthened quite well following a successful first round

Paolo Greco 03:52 2025-05-14 UTC+2

EUR/USD Overview – May 14: The Music Didn't Last Long

The EUR/USD currency pair experienced upward movement for most of Tuesday. One gets used to good news quickly, and the market expected further strengthening of the U.S. dollar. We anticipated

Paolo Greco 03:52 2025-05-14 UTC+2

EUR/USD. And Then They Woke Up: Market Euphoria Over the U.S.-China Trade Truce Fades

The currency market's initial euphoria following the announcement of a temporary trade truce between the U.S. and China has now faded. The early optimism has given way to the sobering

Irina Manzenko 01:23 2025-05-14 UTC+2

Inflation Does the Dollar a Bearish Disservice

One of the few indicators the market occasionally pays attention to is U.S. inflation. After Donald Trump introduced trade tariffs, economists immediately started discussing rising inflation. This conclusion is logical

Chin Zhao 01:14 2025-05-14 UTC+2

The Euro Prepares for Retaliation

Man proposes, God disposes. After the White House imposed strict tariffs on America's Independence Day, there was much discussion about rising inflation and a slowing U.S. economy. However, instead

Marek Petkovich 00:18 2025-05-14 UTC+2

USD/CHF. Analysis and Forecast

The USD/CHF pair is pulling back from the monthly high reached yesterday. This retreat is driven by a technical correction following a strong upward move. The U.S. Dollar Index, which

Irina Yanina 18:30 2025-05-13 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair continues its five-day rally, trading near the key psychological level of 1.4000, where it is encountering resistance ahead of the release of the U.S. Consumer Price

Irina Yanina 18:26 2025-05-13 UTC+2

EUR/JPY. Analysis and Forecast

The EUR/JPY pair is losing slight ground, holding losses below 164.40 following the release of the ZEW Economic Sentiment Surveys for Germany and the Eurozone. In May, Germany's ZEW Economic

Irina Yanina 18:24 2025-05-13 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is showing signs of recovery but continues to face challenges as the U.S. dollar strengthens amid progress in trade negotiations between the United States and China

Irina Yanina 11:08 2025-05-13 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.