Canadian Dollar Declines Amid Trump’s Tariff Threats and BoC Uncertainty

The Canadian dollar (CAD) continued to decrease on Wednesday as the USD/CAD pair remained above 1.4200.

Market sentiment was uneasy due to U.S. President Donald Trump’s renewed threats of tariffs, further complicating the future of the Bank of Canada’s monetary policies.

Investors were closely monitoring trade policies that could impact stability as they lacked Canadian economic data to inform their decisions, instead turning to broader market indicators such as the recent meeting minutes of the Federal Reserve (Fed), which decided to maintain interest rates due to persistent concerns about inflation.

Canada’s inflation figures indicated a rise in prices, which could lead to uncertainty about rate cuts by the Bank of Canada in the future. If inflation remains elevated, the Bank may delay any easing measures, causing market fluctuations to persist. In the United States, data on the housing market presented a mixed view, with a decrease in Housing Starts along with a slight uptick in Building Permits.

Interest rate differentials between Canada and the United States are still influencing the performance of the Canadian dollar significantly. The CAD has experienced pressure for three sessions and hit a weekly low compared to the USD. Traders are closely monitoring economic indicators to assess the Bank of Canada’s upcoming actions and how they might impact currency movements.