USD/CAD descends to about 1,3900 before the BOC monetary policy decision

• The USD/CAD falls to about 1,3900 due to a significant weakness in the US dollar.
• Market participants begin to doubt the credibility of the USD due to abrupt Trump tariff ads.
• Investors expect the decision on the interest rates of the BOC and Powell’s speech of the Fed.

The USD/CAD torque falls abruptly to about 1,3900 in the European session on Wednesday. The Loonie pair weakens as the US dollar (USD) goes back after a brief recovery movement on Tuesday. The US dollar index (DXY), which follows the value of the dollar against six main currencies, falls to about 99.40.

Investors continue to get rid of the US dollar in fear that the growing war of tariffs between the United States (USA) and China is in a stagflation. The inability of the US to satisfy the lost imports of China in terms of quantity and prices in a short period of time could lead to an increase in inflationary pressures and decelerate economic growth.

Meanwhile, the decrease in the credibility of the US dollar due to the erratic tariff ads by US President Donald Trump has also weighed on the USD index.

Looking ahead, the main trigger for the US dollar will be the speech of the president of the Federal Reserve (FED), Jerome Powell, which is scheduled for 17:30 GMT.

In the neighboring nation, investors will focus on the monetary policy decision of the Bank of Canada (BOC), which will be announced at 13:45 GMT. The BOC is expected to maintain interest rates at its current levels of 2.75%. This would be the first meeting since June in which the Central Bank will maintain stable interest rates. Until now, the BOC has reduced its key interest rates in 225 basic points (PBS).

Investors will also pay special attention to the press conference of the governor of BOC, TIFF Macklem, to obtain clues about how Trump’s international policy will shape monetary policy and economic perspectives.