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USD/CAD slides near 1.4 ahead of Bank of Canada decision
The Canadian dollar has gained support from a broad US dollar pullback after softer US inflation data and a jump in Brent crude above $86 tied to renewed US-Iran tensions.
Action Forex reports USD/CAD has fallen to its lowest level in nearly a month, putting the pair near key support around 1.4 ahead of the Bank of Canada policy decision.
The outlet points to three tailwinds for the loonie, including a retreat in the US dollar after weaker-than-expected US CPI, higher oil prices that typically improve Canada’s export outlook, and rising expectations the Bank of Canada could sound more hawkish than markets anticipated only a week ago.
Brent crude has surged above $86 amid renewed US-Iran hostilities that raise concerns about energy supplies through the Strait of Hormuz, which in turn strengthens the case that Canada’s terms of trade are improving.
With economists overwhelmingly expecting the Bank of Canada to hold its policy rate at 2.25%, Action Forex says investors will focus less on the decision itself and more on Governor Tiff Macklem’s message, including whether he adjusts his assessment of the balance between weaker growth and energy-driven inflation risks, plus any discussion around the CUSMA trade review.
Latest closeWTI crude $79.90 ▲2.2%|Brent $85.36 ▲2.5%