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

AUD/USD. RBA Delivers Dovish Scenario, but It's Too Early to Rush into Selling

The Reserve Bank of Australia (RBA) followed the most expected scenario at its May meeting, cutting the interest rate by 25 basis points. However, AUD/USD sellers remain vulnerable

Irina Manzenko 11:44 2025-05-20 UTC+2

Financial Markets Still Gripped by Uncertainty (Potential Decline in #USDX and Gold Prices)

Despite the 90-day truce between Beijing and Washington, market conditions remain extremely tense. Investors are uncertain about what will happen after three months—whether Donald Trump will hike tariffs again

Pati Gani 09:42 2025-05-20 UTC+2

The Market Ignores Warning Signs

When a crowd identifies a leader, it relentlessly pushes forward, clearing everything in its way. Retail investors heeded Morgan Stanley's call to "buy the dip" and began snapping up U.S

Marek Petkovich 09:11 2025-05-20 UTC+2

GBP/USD Overview – May 20: The British Pound Keeps Basking in the Sunlight

The GBP/USD currency pair traded higher on Monday, and we can "thank" the Moody's rating agency for that. As noted in the EUR/USD review, the U.S. credit rating was downgraded

Paolo Greco 07:31 2025-05-20 UTC+2

EUR/USD Overview – May 20: Fearless Moody's and a New Blow to the Dollar

The EUR/USD currency pair found a reason to resume its decline on Monday. As mentioned before, the U.S. dollar's position looks very shaky. It had risen for over a month

Paolo Greco 07:31 2025-05-20 UTC+2

What to Pay Attention to on May 20? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Tuesday, so the macroeconomic background will have no influence on price movements today. However, reports and data releases have rarely impacted currency pairs

Paolo Greco 06:02 2025-05-20 UTC+2

The Fed Allows Only One Rate Cut in 2025

The Federal Reserve continues to remain silent this year. While the European Central Bank has already cut interest rates three times and the Bank of England twice, the FOMC

Chin Zhao 00:40 2025-05-20 UTC+2

AUD/USD. RBA May Meeting: Preview

The Reserve Bank of Australia (RBA) will conclude its meeting on Tuesday, May 20, which may result in a softening of monetary policy parameters. The "dovish" scenario is the most

Irina Manzenko 00:40 2025-05-20 UTC+2

The Dollar Has Sold America Out Completely

Overall, the strength of the EUR/USD uptrend remains intact. The erosion of confidence in the U.S. dollar outweighs the divergence in monetary policy between the Fed and the ECB. Technical

Marek Petkovich 00:40 2025-05-20 UTC+2

AUD/USD. Analysis and Forecast

Spot prices for the AUD/USD pair remain within the familiar range held over the past month, as traders await a fresh catalyst before committing to the next directional move

Irina Yanina 18:22 2025-05-19 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.