Economic Outlook and Summary
September was mostly a “risk-on” month thanks to Powell’s dovish comments at the end of August. His remarks propelled the US 10-year Treasury yield to 3.60% from just above 4.0% in August. The FOMC disappointed about half of the market when they only cut interest rates by 25 bps. Even so, the US dollar index (USDX) climbed steadily. Traders continued to anticipate 50 bp Fed rate cuts until the last day of September when Mr. Powell said about the FOMC: “This is not a committee that feels like it is in a hurry to cut rates quickly.”
Risk sentiment bounced between positive and negative throughout September.
The USD and Federal Reserve
Don't Waste Money With Banks.
Get Exchange Rates Up to 2% Better With KnightsbridgeFX
The US dollar index (DXY) was scrappy in a 99.90-101.80 range in September. Powell’s stated lack of enthusiasm for 50 bp rate cuts and the rapid escalation of geopolitical tensions have seen the top of that band being tested in the early days of October. The next Fed meeting is not until November 7, but there will be no shortage of policymakers offering opinions about the direction of rates and the risks to their view. US election polls could also impact the US dollar closer to the date as traders weigh what a win by either candidate would mean for the economy.
The Canadian Dollar and Bank of Canada
The Canadian dollar drifted lower through most of September before rallying on the back of rising commodity prices, which got a boost from China’s stimulus activities and dovish comments by Bank of Canada (BoC) Governor Tiff Macklem. Mr. Macklem hinted that, due to falling inflation and weak incoming economic data, the risk of a larger-than-expected (50 bp) rate cut was real. If the BoC reduces rates at a faster clip than the Fed, Canadian dollar gains may be limited.
Oil Prices
WTI Oil prices traded with a bit of a bid throughout September, rising from 65.00 to 72.30 before dropping to 66.80 by month-end.
Forecast Table
| Bank | 2025-USD/CAD Q1 | 2025-USD/CAD Q2 |
| Scotiabank | 1.34 | 1.32 |
| Bank of Montreal | 1.38 | 1.37 |
| CIBC | 1.34 | 1.33 |
| TD Bank | 1.35 | 1.35 |
| National Bank | 1.41 | 1.39 |
Forecast Table is for mid-market rates, and subject to change anytime.
We are built to beat bank exchange rates and save you money
KnightsbridgeFx is registered with FINTRAC, under the MSB registration number M09819788. Like most financial institutions, we are required to validate the identity of all clients. We have strict measures in place to protect your privacy.
Our Offices
Main office (Appointment only)
First Canadian Place
100 King Street West
Suite 5700 Toronto, ON,
M5X 1C7
(416) 479-0834
Toll-Free: 1-877-355-5239
Fax: 1-877-355-5239
All rights reserved. Knightsbridge Foreign Exchange
Currency Exchange Canada.
