FX.co ★ Canadian Dollar Strengthens After BoC

The Canadian dollar climbed beyond $1.37 against the US dollar in June, marking its peak in nearly eight months, as investors evaluated the latest decision from the Bank of Canada alongside ongoing tariff concerns. On Wednesday, the Bank of Canada maintained its policy interest rate at 2.75 percent, which was anticipated by the market. This decision followed April's inflation report that indicated a reduction in the headline Consumer Price Index (CPI) below the target, although core inflation measures stayed high. Concurrently, Canada engaged in "intensive and live" negotiations with the United States to obtain exemptions from President Trump's increased tariffs on steel and aluminum, which have alleviated fears of a broader trade disruption that could impact Canada's export-reliant industries. Additionally, rising oil prices, supported by OPEC+'s moderate output increase in July, have further enhanced Canada's petroleum revenues and improved terms of trade. Furthermore, the first quarter GDP showed an annualized growth of 2.2 percent, coupled with a second consecutive monthly increase in retail sales, indicating robust demand across sectors. These factors validated the Bank of Canada's decision and strengthened trust in the resilience of Canada's economy.