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USD/CAD dips below 1.4100 ahead of Bank of Canada decision

Canadian data like lower-than-expected US CPI is weighing on USD/CAD, while the BoC is widely expected to keep its 2.25% policy rate steady for a sixth straight meeting.

Reported · Written up by our desk · Major Pairs

FXStreet reports the Canadian dollar is firming and the USD/CAD pair slid below the 1.4100 level, reflecting an upward correction in CAD after weaker-than-expected US CPI data.

The next catalyst is the Bank of Canada decision, which markets widely expect will hold the policy rate at 2.25% for a sixth consecutive meeting. FXStreet also notes that analysts see a resilient Canadian economy, including a rebound in April activity and improved labor conditions.

Societe Generale expects the BoC to stay on hold Wednesday, citing an unemployment rate that declined by 0.4 percentage points since April to 6.5% in June. Falling gasoline prices may pull headline inflation below 3.0%, but core inflation is still near the BoC’s 2.0% target, leaving room for further tightening.

Still, the outlook for CAD is heavily influenced by external factors, including recent Middle East developments tied to Strait of Hormuz headlines and the resulting moves in oil. FXStreet adds that persistent trade concerns around the USMCA could limit longer-term upside for the currency, while technical weakness follows a failure to hold above 1.4130.

Latest closeGasoline (RBOB) $3.042 ▼3.9%

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