CAD Stable as Markets Brace for Dovish Hold from Bank of Canada

CAD Steady as BoC Seen Holding Rates with Dovish Tone

USD/CAD trades flat as markets look to BoC guidance

The Canadian Dollar (CAD) remains unchanged on Wednesday against the US Dollar (USD), as markets await the Bank of Canada’s (BoC) rate decision due at 9:45 ET. After speculation of a 25bps cut, consensus has shifted to no change, supported by market swaps pricing and recent survey data.

Consensus aligns with a hold, but dovish tone expected

According to a Bloomberg survey, 15 of 17 economists now forecast a rate hold, reflecting diminished expectations for immediate easing. Swaps markets now price in just 5 basis points of easing risk.

While policymakers are likely to hold steady, dovish forward guidance is expected, leaving the door open for future rate cuts as uncertainties linger in the global economic environment.

“Policymakers will probably sit on their hands this week, but their messaging is expected to be dovish,” analysts noted.

CAD slightly above fair value, muted reaction expected

The USD/CAD pair continues to hover near 1.3791, slightly above its predicted fair value. Technical indicators suggest bearish pressure on USD, but without a clear policy shift or press conference confirmation, the CAD is unlikely to significantly weaken.

Key BoC event timings

• Rate Decision: 9:45 AM ET
• BoC Press Conference: 10:30 AM ET with Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers

Explore More on Tredu.com:

• USD/CAD Outlook: What the Charts Are Saying
• What to Expect from Governor Macklem Today
• BoC and Future Rate Cuts: Market Scenarios