CAD Holds Steady Near 1.39 as Markets Await BoC Deliberations

The Canadian dollar has remained relatively stable near the 1.39 level as markets await the Federal Reserve and Bank of Canada's summary of deliberations.

According to Scotiabank strategists Shaun Osborne and Eric Theoret, the Bank of Canada is likely to sound more hawkish after firmer inflation data, despite still-accommodative policy settings.

The bank's focus on inflation risks relative to growth uncertainty caused by trade friction may have sharpened following this week's inflation data, which suggest firmer underlying pressure on prices.

The Bank of Canada's policy settings remain accommodative, but concern about price pressures suggests a growing risk that the process of normalization may start late this year, as per Scotia's long-held rate forecast.