OTTAWA, September 2, 2026, 07:40 EDT —
- At 07:34 EDT, USD/CAD was at 1.3928, making the Canadian dollar around 0.2% lower compared with Tuesday’s close.
- A Reuters poll of 35 economists found unanimous expectations that the Bank of Canada would keep its overnight rate at 2.25%.
- On August 31, Canada’s two-year benchmark yield ended the session at 3.01%, standing 76 basis points higher than the policy rate.
- The rate announcement is scheduled for 09:45 EDT, with a press conference to follow at approximately 10:30 EDT.
The Canadian dollar slipped roughly 0.2% ahead of Wednesday’s Bank of Canada announcement. Markets anticipate rates will remain unchanged, though the yield curve continues to reflect a lasting inflation premium.
USD/CAD climbed to 1.3928 at 07:34 EDT, advancing from its previous close at 1.3901. A rising exchange rate shows that one U.S. dollar purchases more Canadian dollars Yahoo Finance.
The division is more significant than an expected pause. Short-term yields are still considerably higher than the 2.25% overnight rate, restricting room for dovish signals.
USD/CAD moved above Tuesday’s close
Higher values indicate a weaker Canadian dollar.
The Bank is set to release its decision at 09:45 EDT. Every one of the 35 economists surveyed by Reuters on August 28 expected no change.
The current state of the economy allows policymakers to pause for now. Real gross domestic product increased by 0.8% in the second quarter, which is equal to an annualized rate of 3.3% Statistics Canada.
Inflation paints a more complex picture. Headline CPI stood at 3.0% in July, with CPI-trim at 1.9% and CPI-median at 2.0%, according to Statistics Canada.
Gasoline lifted headline inflation above core measures
Year-over-year change in July 2026; the Bank’s target midpoint is 2%.
Source: Statistics Canada, Consumer Price Index, July 2026. Released August 17, 2026.
Gasoline costs increased by 25.7% compared to a year ago. The CPI without gasoline remained at 2.2%, indicating that the energy shock was not widespread.
Avery Shenfeld, chief economist at CIBC Capital Markets, stated that worries over inflation were “roughly offset by risks to economic growth from trade tensions.” The Reuters poll forecast no rate hike before late 2027.
Government bonds provide a clearer indication for investors. On August 31, the two-year yield closed at 3.01%, compared to 3.73% for the 10-year benchmark bond.
Canada’s bond curve sits above the policy rate
Percent; latest official benchmark closes available before the decision.
The curve’s upward tilt indicates term and inflation risk, rather than an imminent change in policy. This also leaves fixed mortgage funding costs unaffected by the overnight rate.
The Bank stated in July that the economy was still experiencing excess supply. It projected growth of 0.7% for 2026, with increases of 1.8% expected in both 2027 and 2028 Bank of Canada.
Investors are set to monitor comments about inflation and Governor Tiff Macklem’s press conference scheduled for 10:30 EDT. A more hawkish tone could push up short-term yields and boost the Canadian dollar, regardless of whether rates are raised.
Risks: An unexpected rate adjustment would rapidly shift the currency and front-end curve. Additional trade actions or a new oil shock might also render Wednesday’s guidance out of date.
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