USD/CAD Drops Below 1.3720 Ahead of Bank of Canada Rate Decision

USD/CAD Under Pressure Near 1.3715 as BoC Decision Looms

USD/CAD Retreats Ahead of BoC Interest Rate Decision

The USD/CAD currency pair is trading defensively at around 1.3715 in early Asian market hours on Wednesday. A stronger Canadian Dollar (CAD), backed by rising crude oil prices, is helping to weigh on the US Dollar (USD) ahead of a key Bank of Canada (BoC) interest rate announcement.

BoC Expected to Hold Rates Steady at 2.75%

Market consensus points toward the BoC keeping its benchmark interest rate unchanged at 2.75%. While inflation in Canada has cooled in recent months, policymakers remain cautious amid ongoing global trade uncertainty.

Related reading: Bank of Canada’s Recent Inflation Trends

US Dollar Faces Pressure from Tariff Threats

The Greenback has come under additional strain due to renewed trade tensions. On Tuesday, US President Donald Trump signaled a doubling of tariffs on steel and aluminum, set to begin Wednesday. These moves come as part of the administration’s effort to push for new trade deals by July 8.

Meanwhile, Federal Reserve officials are urging caution on further interest rate hikes, citing the risks introduced by the current tariff environment and potential global economic slowdown.

Crude Oil Gains Support CAD

Crude oil prices edged higher during Asian trading, offering a tailwind for the oil-linked Canadian Dollar. Stronger oil prices typically support Canada’s economy and its currency, as oil is one of the country's top exports.

H2: All Eyes on ISM Services PMI and BoC

Investors are now focused on two major data releases:

• The Bank of Canada's rate statement
• The US ISM Services PMI report

Both events will offer critical insight into the near-term direction of USD/CAD and broader Forex markets.

Internal Links to Consider Adding:

• Crude Oil and Forex Correlation Explained
• What Moves the USD/CAD Pair?
• BoC Interest Rate History