The USD/CAD pair continued its sideways consolidation during the Asian trading session on Wednesday, hovering near its lowest level since October 2024. Spot prices remain nearly flat on the day, trading in the 1.3715–1.3720 range, as investors turn their focus to the Bank of Canada’s (BoC) upcoming policy decision.
The BoC is expected to hold its benchmark interest rate steady at 2.75% when it announces its policy decision later today during the North American session. With no change in rates anticipated, market participants will pay close attention to the accompanying policy statement and press conference for insights into the central bank’s future monetary stance. The tone of the communication could prove pivotal in driving Canadian Dollar (CAD) sentiment and triggering volatility in the USD/CAD pair.
In the lead-up to the central bank announcement, US economic data will also be in the spotlight. The ADP private-sector employment report and ISM Services PMI are due, both of which could influence US Dollar (USD) demand. However, any meaningful upside for the Greenback appears limited, as bearish sentiment persists amid expectations of further rate cuts by the Federal Reserve in 2025.
Adding to pressure on the USD is growing concern over the US fiscal outlook, which has raised doubts about long-term economic stability and capped recent attempts at a recovery from Tuesday’s six-week low.
On the other hand, a slight pullback in crude oil prices—typically supportive of the commodity-linked Canadian Dollar—is offering a modest lift to the USD/CAD pair. Still, given the broader bearish outlook for the USD, the path of least resistance for the currency pair remains tilted to the downside.
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