BBH Sees CAD Downside Risk as BoC Holds Rate at 2.25%

Brown Brothers Harriman (BBH) analyst Elias Haddad notes that the Bank of Canada (BoC) left its policy rate at 2.25% for the fifth consecutive meeting. The central bank signaled no urgency to raise rates despite balanced two-way risks.

BBH views this patient stance as a factor supporting further downside risk for the Canadian dollar (CAD) against the US dollar (USD). The report highlights that the BoC's cautious approach contrasts with the Federal Reserve's more aggressive tightening cycle, widening the policy gap in favor of the greenback.

Market participants are watching for any shift in BoC guidance that could alter the current trajectory, but for now, the path of least resistance for USDCAD appears tilted to the upside.