CAD strengthens on trade optimism and BOC caution – BBH

The Canadian Dollar (CAD) is outperforming most major currencies, BBH FX analysts report.

BOC held at 2.75%, considered cut amid tariff uncertainty

"The path to a US-Canada trade deal is slowly emerging. President Donald Trump said that newly elected Canadian Prime Minister Mark Carney called him yesterday and said, 'Let’s make a deal'. Carney is expected to visit the White House within the next week or sooner."

"The Bank of Canada (BOC) Summary of Deliberations of the April 16 meeting confirmed that Governing Council members debated the case to maintain the policy interest rate or reduce it by 25bps. Ultimately, members reached a consensus to keep the policy interest rate at 2.75% while they gained more information on tariffs and their impacts."

"Members also agreed to be less forward looking than usual. Markets price-in a full 50bps of easing over the next 12 months. This seems about right. The BOC’s scenario analysis shows Canada’s real GDP either stalling in Q2 or contracting over the remainder of 2025."