The Canadian dollar fell to a 2026 low versus the US dollar after the Bank of Canada kept rates unchanged, erasing hike bets and pressuring the loonie.
The Bank of Canada held rates at 4.25% against some expectations of a hawkish signal, causing traders to unwind rate-hike bets. This sent USD/CAD above 1.38 for the first time in 2026, reflecting Canadian dollar weakness amid trade policy uncertainty and sluggish exports.
The Bank of Canada held its rate at 4.25% and struck a cautious tone on trade risks, leading traders to abandon expectations of a near-term rate hike. That weakened the Canadian dollar and pushed USD/CAD above 1.38.
The hold signals the central bank is on pause, with markets now pricing only a 20% chance of a hike this year. The BoC may stay on hold unless trade tensions ease or inflation re-accelerates.
The Canadian dollar slumped to its weakest level against the greenback since late 2025 after the Bank of Canada held its key rate at 4.25%, signaling caution amid trade risks. Markets priced out any remaining expectations for a near-term rate hike, sending USD/CAD above 1.38 for the first time this year. The loonie’s decline reflects broader flight to the dollar as global trade tensions simmer.
The central bank kept rates at 4.25% due to uncertainty over U.S. trade policy and signs of slowing domestic growth, opting for caution despite above-target inflation.
The Canadian dollar fell sharply, hitting a 2026 low as traders scaled back hike expectations, with USD/CAD rising above 1.38.
The loonie's weakness underscores a broader flight to the US dollar amid global trade tensions, potentially pressuring other commodity currencies.