The Canadian dollar gains modestly against the USD as oil retreats and BoC rate cut bets contrast with Fed hike expectations.
The USD/CAD pair fell 0.10% to around 1.4070 in Asian trading Friday, extending losses amid a softer US dollar. The move marks a pause in a three-week decline for the pair, which remains above Wednesday’s lows.
Weaker Canadian inflation data this week reinforced expectations the Bank of Canada will hold rates steady through 2026, while markets price in a higher chance of a Fed rate hike by year-end. Oil prices pulled back from near six-week highs, pressuring the commodity-linked loonie. US-China trade tensions and new Trump administration tariffs also weighed on risk sentiment.
The USD’s safe-haven appeal limited deeper losses for the pair, with geopolitical risks and divergent monetary policy keeping traders cautious.