Bank of Canada Governor Macklem stated during a teleconference in Washington last Friday that, despite efforts to enhance forward guidance, the monetary policy committee will place greater emphasis on potential risks in upcoming interest rate decisions. He underscored the importance of maintaining humility in economic forecasts and remaining vigilant to risk factors. The Bank of Canada is scheduled to announce its new interest rate decision and updated economic projections on October 29, resuming the release of economic and inflation forecasts that were previously paused due to increased uncertainty. Based on market data, the probability of the Bank of Canada implementing a 25 basis point interest rate cut later this month is approximately 64%, which would reduce the benchmark rate to 2.25%. Macklem noted that although external uncertainties have eased compared to the beginning of the year, risks remain elevated. The central bank will consider a survey encompassing corporate and consumer sentiment to gain deeper insights into inflation expectations and expenditure patterns before making a decision, while also monitoring the upcoming September Consumer Price Index release. He anticipates that the Canadian economy, after contracting at an annualized rate of 1.6% in the second quarter, will gradually recover, albeit with limited strength; growth is likely to remain below potential output, making it difficult to close the output gap. During the G7 finance ministers' meeting and the International Monetary Fund gathering, Macklem also highlighted that global economic imbalances are widening, which could exacerbate trade tensions and pose risks to financial stability.

Due to the ongoing federal government shutdown in the U.S., the U.S. dollar has weakened, leading to a depreciation of the USDCAD. Market participants may focus on the Bank of Canada's Business Outlook Survey. The government shutdown has persisted for 19 days without resolution, as senators failed to break the deadlock for the tenth time in Thursday's vote. This marks the third-longest funding gap in modern American history. As U.S.-China trade tensions ease, the depreciation of the U.S. dollar may narrow. U.S. President Donald Trump stated last weekend that he hopes China will purchase soybeans at least at previous levels. He added that he believes China will ultimately reach an agreement on soybean trade. "We can reduce the tariffs China needs to pay, but China must also do some things for us," he said. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in the coming days to de-escalate tensions, with a potential summit between President Trump and President Xi Jinping later this month.

In the 1D timeframe, the Bollinger Bands are expanding upward, with the SMAs diverging positively. The price is currently constrained below the upper Bollinger Band but remains above the ascending trendline. The MACD indicates diminishing bullish momentum; a potential death cross could signal a forthcoming correction. The RSI stands at 64, reflecting strong bullish market sentiment, with resistance levels at 1.41 and 1.44. In the 1W timeframe, the Bollinger Bands are also widening upward, and the SMAs have formed a golden cross. The price is oscillating near the upper Bollinger Band. After the MACD generated a golden cross, the MACD line and signal line have moved above the zero-axis. The RSI is at 58, with higher lows indicating a probable upward move toward the 1.41-1.44 range. It is recommended to go long at the lows.

Trading Direction: Buy

Entry Price: 1.4022

Target Price: 1.44

Stop Loss: 1.38

Support: 1.378, 1.37, 1.357

Resistance: 1.41, 1.42, 1.44