Canadian Dollar churns the waters near key averages

• The Canadian Dollar held steady on Wednesday as Loonie traders weigh bets.
• The Bank of Canada acknowledged that the economy may not need further rate cuts.
• Despite a general easing in Greenback flows, the CAD remains trapped in place.

The Canadian Dollar (CAD) spun in a tight circle for the second day in a row on Wednesday as Loonie traders look for signs to move in either direction. The US Dollar (USD) weakened slightly, but a lack of CAD momentum kept the USD/CAD pair trapped near 1.3770.

The Bank of Canada's (BoC) latest meeting minutes acknowledged that the Canadian economy may not be in a place that requires further interest rate cuts at this time. The BoC's internal dialogue at the Canadian central bank's latest interest rate decision neglected to directly note that the last of seven straight interest rate cuts caused a spike in Canadian bond yields and drove up mortgage prices as investors began to question the BoC's pace of rate cuts.

BoC policymakers instead managed to thread the needle on the observation that the Canadian economy may not be in a place to require further rate cuts, despite ongoing policy turmoil from US tariffs hanging over the Canadian business landscape.

Daily digest market movers: Canadian Dollar treads water, Loonie traders wait for a spark

• The Canadian Dollar has skidded to a halt against the US Dollar, churning chart paper near key moving averages.
• The BoC's latest meeting minutes revealed little new information, but did confirm to central bank watchers that the BoC is less likely to deliver further interest rate cuts for the time being.
• After key US inflation data this week confirmed that prices may not be accelerating as fast as many had feared, the Producer Price Index (PPI) is on the docket for Thursday.
• Business-level inflation tends to exclude all imported goods, so tariffs are unlikely to have any direct impacts.
• Broad-market bets on three straight rate cuts from the Federal Reserve continue to climb.

Canadian Dollar price forecast

The Canadian Dollar's newfound consolidation phase against the US Dollar has driven the USD/CAD pair into an uncomfortable midrange. Bids are clattering along the 50-day Exponential Moving Average (EMA) near 1.3750, and price action momentum has drained out of the pair, leaving the Relative Strength Index (RSI) stuck in the middle near 53.00.

USD/CAD daily chart