USD/CAD slides down to a two-month low around 1.4255 – BBH

FXStreet Insights Team FXStreet

USD/CAD dropped to a two-month low around 1.4255 on broad USD weakness , BBH's FX analysts report.

CPI print, next week to shape the BOC’s next policy rate decision.

"The Bank of Canada (BOC) January 29 meeting Summary of Deliberation highlighted the bank’s concern around trade disputes. Members viewed the impact of prolonged trade uncertainty on business investment and consumer confidence as the main downside risk to the outlook."

"Even if no tariffs were imposed, a long period of uncertainty under the cloud of tariff threats would almost certainly damage business investment in Canada. Members also agreed that it would not be appropriate to provide any guidance on the future path for the policy interest rate in its communications given the high level of uncertainty surrounding the outlook, and the wide range and complexity of potential trade conflict scenarios."

"Markets have trimmed bets of a 25bps BOC policy rate cut in March to 48% vs. 63% on Monday. Canada’s January CPI print, due next week, will play a crucial role in shaping the BOC’s March 12 policy rate decision."

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