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USD/CAD could extend higher after BoC rate hold, ING says

ING expects the Bank of Canada to keep rates at 2.25%, and flags trade tensions with the US as a key risk for CAD, with USD/CAD seen targeting 1.400 this month.

Reported · Written up by our desk · Major Pairs

ING’s Francesco Pesole expects the Bank of Canada to keep its policy rate on hold at 2.25%, with very low risk of a surprise hike, even as headline CPI rose back to 3.0% in July.

Pesole said core inflation remains well anchored around 1.9% to 2.0%, reducing the case for an unexpected tightening move, and he expects USD/CAD could extend higher toward 1.400 during the month.

ING also warned that trade tensions with the US pose deep risks for Canada, noting that the economic impact could be significant even if tariffs are eventually negotiated away.

The bank highlighted that trade uncertainty can weigh on business spending and hiring plans, as well as consumer activity, adding pressure to the Canadian dollar.

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