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• USD/CAD trades in negative territory near 1.4435 in Monday’s late American session. 
• The fears of the US economic slowdown and persistent selloff on Wall Street weigh on the US Dollar. 
• The BoC is expected to cut its benchmark rate by 25 bps to 2.75%. 

The USD/CAD pair trades with mild losses around 1.4435, snapping the two-day winning streak during the late American session on Monday. Investors worried that tariff policy uncertainty would tip the US economy into a recession, weighing on the US Dollar (USD). Investors brace for the Bank of Canada (BoC) interest rate decision on Wednesday, which is expected to continue its easing campaign. 

The probable US economic slowdown and ongoing selloff on Wall Street drag the Greenback lower against the Canadian Dollar (CAD). The weaker-than-expected US February job data suggested that the Federal Reserve (Fed) remained on track to cut interest rates multiple times this year. Traders are now pricing in 75 basis points (bps) of cuts from the Fed this year, LSEG data showed, with a rate cut fully priced in for June. 

Investors will closely watch the US Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus. Investors hope for another cooldown in headline CPI inflation, which accelerated in January.

On the other hand, the BoC is anticipated to deliver another quarter-point rate cut at its March meeting on Wednesday while it waits to see how long the dispute with Canada’s largest trading partner lasts. CIBC analysts expect the Canadian central bank to cut 25 bps on Wednesday, lowering its benchmark rate to 2.75%, with more cuts to follow this year if trade uncertainty persists. The rising bets of further BoC rate reductions could undermine the CAD and help limit the pair’s losses. 

Meanwhile, a decline in crude oil prices amid tariff uncertainty and rising output from OPEC+ producers might exert some selling pressure on the commodity-linked Loonie. It’s worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.

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