Canadian Dollar Tests Resistance as Trade Tensions Weigh
The Canadian dollar has been on the decline, and its rebound from recent lows is being tested by technical resistance at 1.3990/1.4030. This is according to strategists at Societe Generale, who note that a failure to clear this zone would keep the pair's broader downward trend intact.
The Bank of Canada (BoC) has maintained its steady policy stance, with Governor Tiff Macklem keeping the benchmark policy rate unchanged at 2.25%. However, emerging tariff tensions with the US and shifting rate differentials are creating a tug-of-war between strong overhead technical resistance and downside economic risks for the Canadian dollar.
Francesco Pesole at ING emphasizes that while Canada's headline inflation ticked up to 3.0% in July, core CPI remains firmly anchored at 1.9%. This validates a policy hold at 2.25%, but trade uncertainty remains a significant drag on the CAD.