BoC is widely expected to hold its overnight rate steady at 2.75% today, marking a third consecutive pause in its rate-cut cycle. The slight improvement in the labor market, with unemployment edging back down to 6.9% in June, gives the central bank breathing space to maintain its current stance. However, core inflation pressures remain stubborn, with CPI common stuck at 2.6%, far from the bank’s comfort zone.

With policy already sitting in the neutral range, the BoC is likely opting for a wait-and-see approach, especially given ongoing trade uncertainties and the potential for delayed tariff pass-throughs to consumer prices later in the year. While underlying growth concerns persist, there’s a case for keeping policy steady until inflation dynamics become clearer.

Markets continue to expect further easing this year. A Reuters poll shows that nearly two-thirds of economists forecast a 25 basis point cut in September, followed by another by year-end. That would bring the policy rate down to 2.25%, aligning with weakening demand and persistent disinflation pressures if they materialize.

Technically, considering bullish convergence condition in D MACD, USD/CAD’s break of 55 D EMA this week suggests that it might already be correcting the whole fall from 1.4791. Further rebound is likely in the near term. Though, strong resistance should emerge below 1.4014 (38.2% retracement of 1.4791 to 1.3538 at 1.4017 to limit upside.