💥CAD weakens as BoC lifts key rate by 50 bps❗

BoC surprised markets

The Bank of Canada raised the target for its overnight rate by 50bps to 3.75% in its October meeting, below broad expectations that pointed to a more aggressive 75bps increase. Still, it marked the sixth consecutive rate hike, adding to the 350bps in interest rate increases in the current tightening path and pushing borrowing costs to their highest since 2008. Policymakers also signaled that interest rates will need to rise further to curb inflation, as the bank’s preferred measure of core inflation has not shown meaningful evidence of easing. The central bank also said it will continue its policy of quantitative tightening.

Markets may perceive today's BoX decision as an indication of a parallel pivot in the US and more dovish Fed. Currently, the US indices are trying to recover from the weak opening.

USDCAD pair rose sharply and is approaching resistance level at 1.3665. Source:xStation5