The Canadian Dollar (USD) is underperforming as the BoC’s September minutes underscored trade-policy uncertainty and labor market risks. With swaps pricing nearly 90% odds of another 25bps cut by year-end, CAD looks set to lag peers like AUD, NOK, and SEK amid a more dovish policy stance, BBH FX analysts report.

BoC flags trade risks, jobs weakness

"CAD is underperforming most major currencies. There were no fresh insights from the Bank of Canada’s (BOC) account of the September 17 policy decision to cut rates 25bps to 2.50%. A key takeaway is that 'Members were concerned that continued tariffs and ongoing uncertainty about US trade policy could lead to further labour market weakness across the economy'."

"As such, Canada’s September labor force survey (due October 10) will be a major driver of near-term BOC rate expectations. In the meantime, the swaps market is pricing nearly 90% odds of a 25bps cut by year-end to 2.25%. The BOC’s more dovish policy stance relative to the RBA, Norges Bank, and Riksbank argues for further CAD underperformance against AUD, NOK, and SEK."