BoC Keeps Rates Steady, Bolstering Canadian Dollar Against Trade Tensions

The Canadian Dollar is expected to remain supported due to the Bank of Canada's decision to hold its policy rate unchanged at 2.25% for a seventh consecutive meeting, according to Elias Haddad from Brown Brothers Harriman (BBH).

This move comes as core inflation nears 2%, giving policymakers room to stand pat and cushion economic activity against the backdrop of worsening US-Canada trade tensions.

Haddad believes that market pricing of 75 bps of BoC hikes over twelve months is too aggressive, implying a potential for dovish repricing and a higher USD/CAD exchange rate towards 1.4000.