USD/CAD stays on sidelines near 1.3800 with BoC policy meeting in focus

USD/CAD trades back and forth near 1.3800 ahead of BoC interest rate meeting.
The BoC is expected to reduce interest rates further by 25 bps.
The uncertainty over US presidential elections has dampened market sentiment.

Sagar Dua FXStreet

The USD/CAD pair trades in a tight range near the round-level figure of 1.3800. The Loonie asset consolidates as investors shifts to the sidelines with focus on the Bank of Canada’s (BoC) monetary policy meeting scheduled for 13:45 GMT.

The BoC is expected to deliver subsequent rate cuts due to cooling inflationary pressures. BoC’s core Consumer Price Index (CPI) accelerated to 1.9% in June but remains below the bank’s target of 2%. Also, Canada’s labor market conditions have deteriorated due to higher interest rates. The central bank is expected to reduce interest rates again by 25 basis points (bps) to 4.5%. Earlier, the BoC pivoted to policy normalization in the June meeting.

Meanwhile, sheer weakness in the Oil price has dampened the Canadian Dollar’s (CAD) appeal. The Oil price remains in the bearish trajectory from past three weeks due to weak demand outlook and easing supply concerns. It is worth noting that Canada is the leading exporter of Oil to the United States (US) and lower Oil prices weakens the Canadian Dollar.

The market sentiment remains risk-averse amid United States (US) political uncertainty. S&P 500 futures have posted significant losses in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to weekly gains near 104.50.

In today’s session, investors will focus on the US S&P Global flash Purchasing Managers’ Index (PMI) data for July, which will be published at 13:45 GMT. The report is expected to show that the Manufacturing PMI expanded at a nominal pace to 51.7 from June’s reading of 51.6. The Services PMI, a measure to activities in the service sector, is estimated to have expanded at a slower pace to 54.4 from the prior release of 55.3.

While the major trigger for the US Dollar will be the Personal Consumption Expenditure Price Index (PCE) data for June, which will be published on Friday. The inflation measure will provide cues about when the Federal Reserve (Fed) will start reducing interest rates.

Economic Indicator

BoC Interest Rate Decision

The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.

EUR/USD stays weak near 1.1650 ahead of critical US events

EUR/USD stays in the red near 1.1650 in the European trading hours on Friday. The pair remains undermined by broad US Dollar strength and a cautious market mood. Traders keenly await the US Nonfarm Payrolls data and Supreme Court's ruling on Trump's tariff powers for further direction.

GBP/USD holds lower ground below 1.3450, with eyes on US data

GBP/USD remains subdued for the fourth consecutive day, while trading below 1.3450 in the European session on Friday. Markets remain in a wait-and-see mode before the key US event risks and prefer to hold the US Dollar, which weighs negatively on the pair. The US monthly jobs data and the Supreme Court decision on tariffs are awaited.

Gold flat lines around $4,475; looks to US NFP report for fresh impetus

Gold reverses a modest intraday dip to the $4,453 area, and trades near the top end of its daily range heading into the European session. The upside, however, seems limited as traders might opt to wait for the US Nonfarm Payrolls report later today. The crucial employment details will be looked upon for more cues about the Federal Reserve's rate-cut path.

Bitcoin, Ethereum and Ripple find key support, reviving rally hopes

Bitcoin, Ethereum, and Ripple steadied above key support levels on Friday after being rejected at mid-week resistance zones. The short-term recovery prospects remain intact if the top three cryptocurrencies by market capitalization hold these support zones.

2026 economic outlook: Clear skies but don’t unfasten your seatbelts yet

Most years fade into the background as soon as a new one starts. Not 2025: a year of epochal shifts, in which the macroeconomy was the dog that did not bark. What to expect in 2026? The shocks of 2025 will not be undone, but neither will they be repeated.

Pepe Price Forecast: PEPE risks 100-day EMA fallout as bullish interest fades

Pepe is under extreme selling pressure, trading in the red for the fifth consecutive day, down 1% at press time on Friday. Pepe’s decline following a 72% hike last week suggests a likely profit-booking phase, while on-chain data indicates declining network activity.