- FXStreet anticipates that the Bank of Canada will keep interest rates steady on July 30th.
- The Canadian dollar remains strong against the US dollar.
- This July meeting could mark the fourth consecutive decision to hold rates at 2.75%.
- US tariffs are a key topic for Governor Macclem during the press conference.
The Bank of Canada (BOC) is expected to announce its interest rate decision on Wednesday, July 30th, and it seems likely that the cycle of disconnection has come to a close.
Last month, the BOC opted to maintain the rate at 2.75%, pointing to a “softer but sharper” Canadian economy and “recent stiffness in inflation data.” This rate is still within the bank’s neutral range, estimated between 2.25% and 3.25%.
President Trump’s tariff strategies have had a notable global impact since he returned to the White House in January. New taxes could influence the global supply chain, potentially dominating the discussions at Governor Macclem’s post-meeting press conference.
The BOC’s second-quarter Business Outlook Survey, released on July 21, highlighted that Canadian businesses are increasingly concerned about the tariff situation but remain cautious about hiring and investment. The survey indicated that short-term inflation expectations have reverted to last year’s levels, and many businesses now view a recession as unlikely. Earlier in the year, there was significant worry about US tariffs negatively affecting the economy, yet the main impacts seem concentrated in the steel, aluminum, and automotive sectors.
Consumers appear to sense a slowdown in the economy, as indicated by the latest consumer expectations survey. More individuals express anxiety about job security, given a less robust job market. This has led households to tighten their budgets and adjust spending habits amidst escalating trade war concerns. They don’t foresee a price surge soon but express worries that ongoing tariffs could limit the central banks’ ability to manage inflation.
Taylor Schleich, an analyst at the National Bank of Canada, noted that the notion of the easing cycle being over is gaining traction. However, they do not align with a hawkish stance on expenses.
BOC’s Monetary Policy Decision and Its Potential Effect on USD/CAD
The Bank of Canada will release its policy decisions at 13:45 GMT on Wednesday, accompanied by its Monetary Policy Report (MPR). Following that, Governor Tif McClem will hold a press conference at 14:30 GMT.
Many economists expect the BOC to keep the policy rate at 2.75% on July 30th, extending the pause that began in May and June. This decision aligns with the rebound of the Canadian dollar, which has risen from earlier lows near 1.4800 and is now closer to 1.3700.
Pablo Piovano, a senior analyst at FXStreet, mentioned that USD/CAD has been bouncing within a range of 1.3550-1.3540. Although it’s trading below the key 200-day simple moving average (SMA) at 1.4038, bearish trends are becoming more prominent.
“USD/CAD hit a new YTD low of 1.3538 on June 16th. If this threshold is surpassed, further losses could occur, possibly reaching 1.3418 by the end of September,” Piovano explained.
He continued, “The pair will first encounter resistance at the June ceiling of 1.3797, established on June 23, before approaching the May peak of 1.4015, achieved on May 12.”
The relative strength index (RSI) has risen above 52, suggesting potential for further short-term gains. Piovano concluded by stating, “A mean directional index (ADX) below 15 suggests a lack of confidence in this trend.”
Economic Indicators
BOC Press Conference
The Bank of Canada (BOC) will hold a press conference to announce its monetary policy report. The session includes a prepared statement followed by questions from the media. Comments perceived as hawkish might strengthen the Canadian Dollar (CAD), while softer messages could have the opposite effect.
Last Release: June 4th, 2025 14:30
Frequency: Irregular
Actual: –
Consensus: –
Previous: –
US-China Trade War FAQ
A trade war generally refers to an economic conflict between nations caused by protectionist measures like tariffs, resulting in increased import costs and living expenses.
The conflict between the US and China escalated in early 2018 with the imposition of tariffs due to accusations of unfair trade practices and intellectual property theft. Retaliatory measures were taken by China, leading to a series of tariff increases. Although an agreement was reached in January 2020, tensions reignited during the pandemic, and tariffs have been maintained under the Biden administration.
Trump’s return to the presidency has rekindled the US-China trade conflict, with promises of imposing significant tariffs on China following his inauguration in January 2025. This renewed tension is expected to influence global economic dynamics, particularly in the supply chain sector.
