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Societe Generale economists predict the Bank of Canada (BoC) will maintain its policy rate at 2.25% amid weaker-than-expected employment data and lower-than-anticipated inflation. Despite these softer indicators, markets now anticipate a 33-basis-point tightening by year-end following heightened geopolitical tensions in the Iran region. The Canadian dollar (Loonie) is expected to remain rangebound as central bank inaction offsets external risks. For forex traders, the BoC's decision to hold rates reflects a cautious approach to balancing economic growth and inflation. The 33-basis-point tightening priced in by markets suggests renewed focus on inflationary pressures, particularly as energy prices and global supply chains remain volatile. This could lead to increased volatility in CAD/USD and other cross-currency pairs. Investors should monitor upcoming BoC statements for hints on future rate path adjustments. The Loonie's performance will likely hinge on the interplay between domestic economic data and global risk sentiment. Key levels to watch include CAD/USD support at 1.3300 and resistance at 1.3600.
