- The Bank of Canada is expected to keep rates on hold, with markets pricing a 58% chance of a pause following its previous insurance cut tied to U.S. tariff risks.
- USD/CAD could see near-term volatility, with technical indicators suggesting a potential rebound if the BOC refrains from further easing.
Markets are narrowly leaning toward no rate cut from the Bank of Canada this Wednesday. Markets were pricing a 58% chance of a pause as of Friday last week. With traders nearly evenly split, short-term volatility in USD/CAD is possible.
While the Bank had previously signalled it would “proceed carefully” on future rate cuts, that guidance came before the heightened risks tied to the U.S. “Liberation Day” tariff announcements.
From a technical standpoint, there are early signs the pair may be forming a near-term bottom. If the BOC holds rates steady, USD/CAD could retake its 200-day moving average, opening the door for a move toward resistance near 1.4100.
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