Just to shed some light on fundamentals as to why CAD losing strength: This month’s BoC policy statement, monetary policy report and quarterly press conference establish a firm neutral stance that will reinforce the recently seen relative insensitivity of CAD rates (and thus the currency) to respond to near-term weakness in the data or downside risks.
Into the recent policy meeting, despite the recent cyclical disappointment in the data, an exogenous shock (the Alberta wildfires) that will drive a second quarter contraction and increased global uncertainty from Brexit, BoC expressed an on-going comfort with the outlook and comfort in its neutral bias.
This comfort stems from some optimism in expectations that the Alberta wildfires were a temporary shock that has already passed, a view that Brexit uncertainties are offset by easier global financial conditions.
On the flip side, let’s not forget BoE’s rate cuts which is very much on the cards in the next monetary that could add further depreciation pressure on sterling.
One should understand despite printing better than expected inflation data in the UK, the pound against almost all majors continued to display softness on today while FX markets waited for the International Monetary Fund (IMF) to slash economic forecasts in the wake of the U.K.’s decision to leave the European Union.


BoE Set to Cut Rates as UK Inflation Slows, but Further Easing Likely Limited
Fed Near Neutral Signals Caution Ahead, Shifting Focus to Fixed Income in 2026
RBA Holds Rates but Warns of Rising Inflation Pressures
Canada Stocks Steady as Markets Await Fed and BoC Decisions
South Korea Warns Weak Won Could Push Inflation Higher in 2025
Asian Fund Managers Turn More Optimistic on Growth but Curb Equity Return Expectations: BofA Survey
BOJ Expected to Deliver December Rate Hike as Economists See Borrowing Costs Rising Through 2025 



