Canadian dollar slips to 2-month low as BoC maintains rates

[Ben Graham]

The Canadian dollar extended its losses on Wednesday. In the North American session, USD/CAD is trading at 1.3811, up 0.29% on the day. The Canadian dollar is down for a fifth straight trading day, declining 1.6% during that time. Earlier, the Canadian dollar weakened to 1.3819, its lowest level since May 30.

Bank of Canada holds rates

As expected, the Bank of Canada held the benchmark rate at 2.75% for a third consecutive meeting. The rate statement noted that US trade policy remains "unpredictable". Canada and the US are still locked in a trade war and the BoC will be hesitant to lower rates until there is greater clarity with regards to US trade policy vis-à-vis Canada.

Fed expected to stay on the sidelines again

The Federal Reserve meets later today and is all but certain to maintain the benchmark rate for a fifth straight meeting. Although the rate decision won't be a surprise, investors will be looking for clues regarding the September meeting, as the markets have priced in a rate cut at 63%, according to CME's FedWatch.

What could prove interesting at the meeting is the possibility of a split vote. Not one dissenting vote, but perhaps two. Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman have both voiced concern that interest rates are too high given the widening cracks in the US labor market. The last time that two members dissented in a rate decision was in 1993.

Fed Chair Powell is likely to be quizzed about tariffs and inflation at his press conference. The US has concluded trade deals with the Japan and the EU, which has reduced the uncertainty over trade policy. Will Powell sound hawkish or will he signal that the Fed is ready to cut in September?

USD/CAD Technical

• USD/CAD has pushed above resistance above 1.3782 and 1.3795 and is testing 1.3817. Next, there is resistance at 1.3830
• 1.3760 and 1.3747 are providing support

USDCAD 4-Hour Chart, July 30, 2025

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