CAD's Upside Limited Amid Diverging Policy Expectations
The Canadian Dollar (CAD) has been trending upwards against the US Dollar (USD), but its upside is expected to be limited. The USD/CAD pair was down 0.10% on Friday, trading around 1.4070 zone amid a softer US Dollar.
The decline in crude oil prices from their highest level since June 11 has contributed to the Canadian currency's softness. However, the underlying bullish tone of the US Dollar warrants caution before placing aggressive bearish bets on the USD/CAD pair.
The Bank of Canada (BoC) is expected to keep interest rates unchanged through the remainder of 2026, while the US Federal Reserve (Fed) may raise borrowing costs by the end of this year. This divergence in policy expectations has been a key factor weighing on the Canadian Dollar.