The Canadian dollar fell against most major rivals after an aggressive step taken by the Bank of Canada today.

The Bank of Canada today announced an interest rate cut of 50 basis points to 3.75% as expected.

The BOC expects the global economy to expand by 3% in the next two years, and for the US economic growth to be better than expected, but Chinese outlook remains weak.

Inflation has taken a dive in advanced economies in recent months, with global financial conditions improving overall since July as markets anticipate interest rate cuts.

Global oil prices were $10 lower than expected in the BOCs July report.

In Canada, the economy grew by 2% in the first half of the year, and the bank expects a 1.75% growth rate in the second half.

The BOC also expects the opening of the Trans Mountain Expansion pipeline to boost exports, however, the labor market remains weak, with unemployment at 6.5%.

The bank expects total GDP growth to improve gradually as interest rates fall, with housing investments increasing as well amid strong housing demand and increased spending on renovations.

The BOC expects a total GDP growth of 1.2% in 2024, and 2.1% in 2025, and 2.3% in 2026.

Canadas inflation fell from 2.7% in June to 1.6% in September, paving the way for aggressive interest rate cuts by the central bank.

The BOC asserted that future interest rate cuts will be guided by upcoming data and their impact on inflation outlook.

On trading, the CAD/USD pair fell 0.2% as of 15:55 GMT to 0.7225.

Aussie

The Australian dollar fell 0.8% against its US counterpart to 0.6631.

US Dollar

The dollar index rose 0.4% as of 14:57 GMT to 104.4, with a session-high at 104.5, and a low at 104.09.

It comes as US two-year treasury yields fell by 3 basis points to 4.065%.

US 10-year treasury yields on the other hand rose by 5 basis points to 4.256%, as 30-year treasury yields rose by 3.5% to 4.53%.