BoC Policy and Fed Bets Push USD/CAD Exchange Rate Above 1.3800

Time Stamp: March 8, 2023 10:28 PM
Source Node: 2510359

The USD/CAD exchange rate has been on a steady rise in recent weeks, pushing above the 1.3800 mark. This is largely due to the Bank of Canada’s (BoC) policy decisions and the Federal Reserve’s (Fed) bets on the US dollar.

The BoC has been gradually increasing its benchmark interest rate since July 2017, with the most recent hike taking place in October 2018. This has made Canadian assets more attractive to investors, leading to an appreciation of the Canadian dollar against the US dollar.

Meanwhile, the Fed has been increasing its benchmark interest rate since December 2015. This has made US assets more attractive to investors, leading to an appreciation of the US dollar against the Canadian dollar.

The combination of BoC policy and Fed bets have pushed the USD/CAD exchange rate above 1.3800. This is a significant milestone, as it marks the highest level for the exchange rate since June 2017.

The appreciation of the US dollar against the Canadian dollar is likely to continue in the near future, as both central banks are expected to continue their respective tightening cycles. This could lead to further gains for the USD/CAD exchange rate.

However, it is important to note that there are several factors that could impact the exchange rate in the coming months. These include global economic conditions, geopolitical developments, and changes in commodity prices. As such, investors should remain vigilant and monitor these factors closely.

In conclusion, BoC policy and Fed bets have pushed the USD/CAD exchange rate above 1.3800. While this could lead to further gains in the short term, investors should remain aware of potential risks and monitor global economic conditions closely.