CAD Weakens Slightly Ahead of BoC Rate Decision

CAD Softens Slightly as Markets Await Bank of Canada Decision – Scotiabank

CAD Drifts Lower, Still Within Range

The Canadian Dollar (CAD) has edged slightly lower, tracking the performance of other major currencies. According to Scotiabank, spot USD/CAD remains confined to a range just under the 1.36–1.38 level, with little directional bias expected until the Bank of Canada (BoC) announces its rate decision on Wednesday.

Limited Market Pricing for BoC Rate Cut

Market expectations are currently low for any policy change, with implied probabilities showing only a 20% chance of a rate cut. However, Scotiabank analysts emphasize that BoC policymakers face a complex environment, including:

• Ongoing US tariff uncertainty, which has already influenced global growth projections.
• OECD’s downward revision of 2025 global GDP growth from 3.3% to 2.9%.
• Wildfires in Alberta, threatening oil production and potentially dragging on Canada's short-term economic activity.

CAD Trading Above Fair Value Could Limit Upside

Scotiabank also points out that CAD is currently quoted slightly above their fair value estimate of 1.3781, which may limit further near-term gains unless a decisive shift in sentiment against the US Dollar (USD) emerges.

“Unless new incentives to sell the USD appear, we may continue to see the CAD in this narrow holding pattern,” analysts note.

Related Reading on Tredu:

• Will the BoC Hold or Cut? CAD Braces for Wednesday’s Decision
• Oil Prices, Wildfires, and the Loonie: What's Next for CAD?
• USD Outlook After Latest Tariff Developments