Canadian dollar hits four-week high in limited move after BoC decision

The BoC left its benchmark interest rate unchanged at 2.25% for the sixth consecutive policy meeting as expected and said growth would strengthen in the second half of the year as inflation pressures eased.

In a statement, Governor Tiff Macklem dropped comments he made in June, when he said there could be a need for consecutive rate increases if inflation spiked.

"A balanced BoC outlook does not do much for the CAD," strategists at TD Securities, including Jayati Bharadwaj, said in a note.

"U.S. data and the Fed outlook will likely be bigger drivers of USD-CAD in the near-term as the potential for a repricing of the U.S. rate path is greater than for Canada."

The swap market was pricing in 15 basis points of tightening from the BoC by December, down from 17 basis points before the rate decision. 0#CADIRPR

The U.S. dollar =USD fell against a basket of major currencies after softer-than-expected U.S. producer prices bolstered the view that the Federal Reserve can remain patient on interest rates even as investors weighed renewed strikes on Iran.

The price of oil, one of Canada's major exports, was trading 0.5% lower at $78.95 a barrel, giving back some of this week's sharp gains.

Speculators have raised their bearish bets on the Canadian dollar to the highest level since January 2025, data from the U.S. Commodity Futures Trading Commission showed on Friday. 1090741NNET

Canadian government bond yields moved lower across the curve, tracking moves in U.S. Treasuries.