The USD/CAD pair is finding temporary support near 1.4400 following the release of US CPI data and the Bank of Canada's policy decision. Here's a breakdown of the key events:
- Cooling US inflation is expected to prompt dovish bets from the Federal Reserve.
- The Bank of Canada (BoC) cut interest rates by 25 bps to 2.75%, as expected, while guiding a dismal economic outlook.
Market Overview
The USD/CAD pair is experiencing temporary support near the 1.4400 level during North American trading hours on Wednesday. This movement follows the release of the US Consumer Price Index (CPI) data for February and the BoC's interest rate decision.
US CPI Data Impact
The US CPI report revealed a faster-than-expected deceleration in year-on-year headline and core inflation, reaching 2.8% and 3.1%, respectively. On a monthly basis, both headline and core CPI increased moderately by 0.2%, compared to estimates of 0.3%. The US Dollar Index (DXY) initially moved higher but the move seems short-lived.
Cooling inflationary pressures are generally unfavorable for the US Dollar (USD), as soft inflation data often encourages dovish bets from the Federal Reserve (Fed).
BoC's Rate Cut
Meanwhile, the Canadian Dollar (CAD) experienced gains after the BoC reduced its key borrowing rates by 25 basis points (bps) to 2.75%, aligning with expectations. Traders are becoming more confident in further monetary policy easing by the BoC, driven by growing concerns about the Canadian economic outlook amid trade tensions with the US.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.17% | 0.45% | -0.13% | 0.24% | 0.25% | 0.09% | |
| EUR | -0.22% | -0.06% | 0.19% | -0.35% | 0.00% | 0.03% | -0.13% | |
| GBP | -0.17% | 0.06% | 0.27% | -0.29% | 0.07% | 0.09% | -0.07% | |
| JPY | -0.45% | -0.19% | -0.27% | -0.57% | -0.21% | -0.20% | -0.34% | |
| CAD | 0.13% | 0.35% | 0.29% | 0.57% | 0.37% | 0.38% | 0.23% | |
| AUD | -0.24% | -0.00% | -0.07% | 0.21% | -0.37% | 0.02% | -0.13% | |
| NZD | -0.25% | -0.03% | -0.09% | 0.20% | -0.38% | -0.02% | -0.15% | |
| CHF | -0.09% | 0.13% | 0.07% | 0.34% | -0.23% | 0.13% | 0.15% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Trade War Impact
On Tuesday, Ontario Premier Doug Ford agreed to roll back the 25% surcharge on electricity exports to the US, following President Trump's threat to impose additional tariffs on Canadian aluminum and steel. Earlier this month, Trump imposed tariffs on Canada for allowing drugs into the US through borders.
BoC Governor's Outlook
BoC Governor Tiff Macklem cautioned that heightened “trade tensions” could disrupt “job market recovery”. He also warned that US tariffs will likely “increase inflationary pressures in Canada and curb growth” and guided moderate growth in the January-March period due to trade conflict weighing on “sentiment and activity”.