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CAD Six-Day Slide Deepens as BoC Minutes Signal Patience
The Canadian dollar fell for a sixth straight session against the greenback after BoC minutes showed policymakers content to wait on rates. The loonie's path now hinges on whether upcoming data forces the BoC off the sidelines.
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The Canadian dollar fell for a sixth straight day against the US dollar on Wednesday, extending its longest losing streak in weeks. The move came after minutes from the Bank of Canada's latest policy meeting showed policymakers were content to hold rates steady, reinforcing a widening rate gap that favours the greenback.
BoC Minutes Cement a Patient Rate Stance
The central bank's account of its April deliberations revealed a governing council that saw little urgency to adjust borrowing costs. Members noted that the current policy rate was "appropriately restrictive" and that the economy was evolving broadly as expected. The tone underscored a deliberate patience: the BoC is willing to wait for clearer evidence that inflation is sustainably headed to 2% before it moves.
That stance contrasts with the market's read on the Federal Reserve. While the Fed has also paused, US policymakers have pushed back against near-term rate-cut expectations, and a run of firm inflation data has kept the door open to a higher-for-longer scenario. The result is a rate differential that continues to widen in the dollar's favour. Two-year Canadian government bond yields lagged their US counterparts, compressing the premium that had briefly supported the loonie earlier in the year.
Broad Dollar Strength Adds a Second Layer of Pressure
The loonie's slide was not just a domestic story. The US dollar index posted broad-based gains, squeezing most major currencies. A risk-off tilt in equity markets and a flight to the safety of US assets amplified the move. For the Canadian dollar, which often takes cues from global risk appetite, the combination of a patient BoC and a bid greenback proved toxic.
The USD/CAD pair pushed through several technical levels that had held earlier in the month. The six-day decline has now erased the loonie's modest April gains, leaving the pair near the top of its two-month range. Traders who had positioned for a Canadian rebound were forced to cover, accelerating the move.