Where we are: USD/CAD currently trades at 1.3677, virtually unchanged on the day after a tight 1.3673-1.3693 range. The pair remains slightly below yesterday’s NY close as markets await further catalysts. Technicals are mixed, but the overnight high offers initial resistance with support around the intraday low.
What’s driving it: The Canadian dollar is struggling to find sustained support as the Bank of Canada’s easing bias remains in play. Governor Macklem’s cautious tone at the last meeting, citing tariff uncertainty and a softer growth path, continues to weigh on sentiment. Despite recent positive macro prints, including a 2.6% MoM GDP increase, below-target CPI and concerns regarding domestic demand are keeping further rate cuts on the table. The Canadian 2s10s curve has steepened to +63bp, potentially signaling some underlying optimism but not enough to offset the dovish central bank narrative.
- The Bank of Canada holds its monetary policy decision and releases its Monetary Policy Report today at 09:45 ET.
- WTI crude continues to rally, up 4.51% to $103.98, usually a CAD positive driver.
- Speculator positioning remains modestly short CAD, with net non-commercial positions at -58,834 contracts, or -23.1% of open interest — but that’s only the 65th percentile, suggesting room for further short build.
NY session focus: Today’s session will be dominated by central bank action on both sides of the border. Traders will be laser-focused on the BoC’s rate statement and press conference starting at 09:45 ET for any shifts in their easing bias. Later, the Fed announces its decision and holds a press conference at 14:00 ET. Key levels to watch are 1.3700 for resistance and 1.3650 for support. The current winning trade is fading any hawkish BoC surprises into USD strength given broad DXY resilience. The pain trade is a genuinely hawkish BoC surprising the market by removing the easing bias, triggering a sharp CAD rally and squeezing out short positions.