CAD in focus ahead of inflation and BoC meeting - Danske Bank

Tariff exemptions from the US offered temporary support to the dollar, but broader concerns about credibility and economic weakness continue to weigh. With market correlations breaking down and investor confidence shaken, USD pressure may persist in the near term, Danske Bank's FX analysts report.

BoC poised for insurance rate cut amid trade uncertainty

"This week will be eventful in CAD FX space, starting with the March inflation report on Tuesday, and culminating in the key event - the BoC meeting on Wednesday. Minutes from the last BoC meeting largely confirmed that the BoC would have paused in March if not for heightened tariff uncertainty."

"We don't think that the uncertainty has diminished since and thus expect the Boc to deliver another "insurance" 25bp rate cut. Markets are more tilted towards the BoC staying on hold, pricing in around 28% probability of a rate cut."

"Note that the BoC also releases its quarterly MPR, which naturally should remain relatively focused on tariffs and their spillover effects on the Canadian economy."