USD/CAD eases from 1-week high ahead of BoC meeting

Key moments

• USD/CAD pulls back from Monday’s one-week high
• US Dollar broadly weaker amid lingering concerns over US economic slowdown
• Bank of Canada policy decision eyed

The USD/CAD currency pair eased from a one-week high on Tuesday, as investors fretted over US economy and ahead of the outcome of the Bank of Canada’s policy meeting.

The Bank of Canada is expected to lower its benchmark interest rate by 25 basis points to 2.75% at its March 12th policy meeting. This would mark 225 bps of rate cuts since the beginning of the monetary easing cycle in June 2024.

BoC policy makers had highlighted that CPI inflation converged to the 2% target in recent months and was projected to remain near that mark in the upcoming two years.

Still, the BoC Governing Council cautioned that US tariffs would likely bring tests to Canada’s economic recovery.

The BoC expects GDP growth of 1.8% during the next two years.

Meanwhile, the US Dollar was broadly weaker and the yield on 10-year US Treasuries fell, as US recession fears intensified after US President Trump over the weekend refused to rule out a potential downturn.

The Trump administration’s tariffs, particularly those targeting steel and automobiles, added to the overall uncertainty.

Investor focus now sets on the US job openings, CPI inflation and producer price inflation figures this week, which may provide more clues over the US interest rate cut path.

The USD/CAD currency pair was last down 0.16% on the day to trade at 1.4411. Yesterday the major Forex pair went up as high as 1.4472, or its highest level since March 4th.