In the Asian session on Wednesday (June 7), USD/CAD fell to 1.3389, a drop of 0.10%. Bank of America said the Bank of Canada is likely to keep interest rates on hold on Wednesday, which could be negative for the Canadian dollar in the short term, though it should strengthen in the medium term.
The latest from the Bank of Canada:
Analysts said that even the Bank of Canada may take a cautious approach, causing the U.S.-Canadian interest rate spread to return to above zero. An improvement in risk sentiment in the second half of the year could drive the loonie higher over the medium term, they said. Historically, the market has typically delivered positive annual returns after a year of sharp declines, and year-to-date price action is heading in that direction.
