Last updated: October 26, 2026 · By the FXPayback Research Desk
Most likely, yes. A Reuters poll published October 23 shows a narrow majority of economists expect the Bank of Canada to raise its rate from 2.25% to 2.50% on October 28. For USD/CAD, a hike is mostly priced in, so the BoC’s tone and the Fed decision hours later will decide the next move.
The loonie has quietly had a strong month. USD/CAD touched 1.41 on October 20, then slid for days and finished October 23 near 1.4004, according to Trading Economics. So what changed?
Why are markets now betting on a Bank of Canada hike?
Three things flipped the story in under two weeks.
- Inflation is back above the target band. Canada’s annual CPI rose to 3.1% in September, Statistics Canada data reported by BNN Bloomberg showed on October 19. The BoC’s target range is 1% to 3%.
- Businesses expect more inflation. In the BoC’s own Q3 Business Outlook Survey, five-year inflation expectations jumped to 3.91% from 3.39%, Newsquawk’s week-ahead preview noted.
- Oil is expensive. Oil hit $117 a barrel on October 23 for the first time since May, Reuters reported, which feeds straight into Canadian prices and also supports the loonie as an oil currency.
In the Reuters poll taken October 21–23, 19 of 34 economists expect a 25 basis point hike on October 28. In the previous poll, 80% expected a hold through 2026. Futures moved the odds of an October hike from about 30% to roughly 75%.
Is a hike already priced into USD/CAD?
Mostly. At three-in-four odds, a plain 25 bp hike surprises few people, which is why the loonie rallied early. A hold would be the real shock and could snap USD/CAD back toward 1.41.
Here’s the catch: the Fed decides the same day, a few hours later. The Fed’s range sits at 3.75–4.00% after a hike on September 16, and markets expect a hold, per Trading Economics. Even after a BoC hike to 2.50%, the gap between the two policy rates would still be around 150 basis points in the dollar’s favor. A hawkish Fed message about December could easily cancel out a hawkish BoC.
The poll also shows why this hike may not start a long cycle. Economists see Canadian growth slowing to 1.9% in Q3 from 3.3% in Q2, then 1.3% in Q4. Most expect just one more hike by the end of March, which would take the rate to 2.75%.
What does this mean for your trades?
Let’s put the recent move into real money. On USD/CAD, one pip on a standard lot is worth 10 Canadian dollars. At 1.4004, that’s about $7.14 per pip. The slide from 1.41 to 1.40 between October 20 and October 23 was roughly 100 pips.
| Position size | Value per pip | A 100-pip move | Margin at 1:30 | Margin at 1:500 |
|---|---|---|---|---|
| 0.01 lot | about $0.07 | about $7 | about $33 | $2 |
| 0.1 lot | about $0.71 | about $71 | about $333 | $20 |
| 1 lot | about $7.14 | about $714 | about $3,333 | $200 |
Now the cost side. Say your broker quotes 2 pips on USD/CAD on a standard account. That’s about $14.28 per lot, or 2% of that 100-pip swing. On decision day, spreads can widen sharply and a tight stop can be hit by the spread alone. Two decisions in one day means two volatility spikes, so size down, not up.
Run your numbers with the position size calculator and check the margin calculator before the announcement, not after. If you plan to trade the headline itself, our guide on trading high-impact news without blowing up covers the basics.
Which USD/CAD levels are traders watching?
- 1.4100: the October 20 high. A hold by the BoC or a hawkish Fed could send the pair back here.
- 1.4000: the big round number where USD/CAD ended the week. A daily close below it would confirm the loonie’s momentum.
- 1.3965: roughly where Trading Economics models the pair by the end of the quarter. A hawkish BoC press conference could pull that forward.
Oil matters too. If crude cools from $117, part of the loonie’s support goes with it, and oil rallies can fade fast, as US–Iran deal hopes showed earlier this month.
How can you cut costs during a two-decision day?
Event days mean more trades: an entry, a stop-out, a re-entry. Each pays spread or commission, win or lose. FXPayback gives part of that back. When you trade through a partner broker via FXPayback, you receive up to 90% of the IB commission as cashback on every lot.
A worked example: at the time of writing, Exness Standard account cashback is about $2–3 per lot on forex. Trade 20 lots of USD/CAD and other majors around this week’s BoC, Fed, ECB and BoJ decisions, and at $2.50 a lot that’s $50 back, on trades you’d have placed anyway. FXPayback has been paying traders since 2020, withdrawals start at $1, and you can see the real payout proofs.
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What to watch next
| Date | Event | Why it matters for USD/CAD |
|---|---|---|
| October 28, 9:45 ET | Bank of Canada decision and Monetary Policy Report | A hike is expected. The new forecasts and any hint of more hikes decide the loonie’s next leg. |
| October 28, 14:00 ET | Fed decision and press conference | A hold is expected. Talk of a December hike would support the US dollar. |
| October 29 | US Q3 GDP and September PCE inflation | Core PCE is forecast at 3.1% year on year. A hot print lifts US yields and USD/CAD. |
| October 29 | ECB decision | Moves the broad US dollar, which spills into USD/CAD. |
| December 9 | Next Bank of Canada decision | The poll sees one more hike by March, so December is live if inflation stays above 3%. |
For background on the Fed’s thinking, see what the FOMC minutes said about another hike.
Frequently Asked Questions
Why does the Canadian dollar often move with oil prices?
Canada is a major oil exporter, so higher crude prices tend to support the loonie. Rate expectations can outweigh that link on central bank days.
What time is the Bank of Canada announcement?
The Bank of Canada publishes its rate decisions at 9:45 a.m. Eastern Time. The October 28 decision comes with a full Monetary Policy Report and a press conference afterward.
Can USD/CAD rise even if the Bank of Canada hikes?
Yes. If the hike was already priced in and the BoC signals it may pause, or if the Fed sounds hawkish later the same day, the US dollar can win the day despite the Canadian hike.
Can I get cashback on USD/CAD trades?
Yes. If you open your account with a partner broker through FXPayback, you get cashback on every lot of USD/CAD and other pairs, whether the trade wins or loses, and you can withdraw from $1.
Risk disclaimer: Trading forex, gold and CFDs involves significant risk and you can lose more than your deposit. Past moves do not guarantee future results. This article is for information only and is not financial advice.