USD/CAD: Loonie will continue to struggle on increasing recession fears – Commerzbank

The Bank of Canada (BoC) continued on its steepest rate-hiking path in decades with a  75 bps hike. The move was in line with expectations and lifts the overnight rate to 3.25%. Meanwhile, the move in CAD was very modest. Economists at Commerzbank expect the loonie to remain under pressure in the near-term.

No surprise from the BoC

“The 75 bps rate hike to now 3.25% had been generally expected and also a hawkish statement had clearly been largely priced in. The loonie was unable to benefit in particular.”

“As a result of weaker economic data and the prospect of a moderately active BoC, CAD will probably continue to struggle against USD in particular once increasing (global) recession fears affect market sentiment.” 

“Medium-term, the loonie should manage to benefit more from its advantages though.”