USD/CAD to sit down in the direction of 1.41 levels

As is generally expected, BOC provided a reduction of 25 BP interest edge, which gave the guideline rate to 2.75%, report the FX analysts of Danske Bank, Kristoffer Kjær Lomholt and Filip Andersson.

A potential loosening of the US tariffs can serve as CAD-positive

“The meeting was quite uneventful, and the BOC naturally focused on the uncertainty and effects in connection with a trade war with the United States, which led to a limited market reaction. The BOC also released the survey data, which indicates that the threats with new tariffs and uncertainties about the trade war are already demanding the trust of consumers and business.”

“Governor Macklem warned that 'the monetary policy cannot compensate for the effects of a trade war and warned that the heavy new US tariffs will weaken its size and duration on Canada.”

“We also expect USD/CAD to be reduced at short notice in the middle of the level of 1.41 in the middle of a culise of the current, short-stretched CAD positioning and a further weakening of USD, while a potential loosening of US tariffs that are imposed on Canada would act as CAD-positive.”