Canadian Dollar Holds Near 1.386 Ahead of Bank of Canada Decision

The Canadian dollar was trading close to 1.386 per U.S. dollar on September 1, holding most of the recovery recorded in the previous session.

USD/CAD was around 1.3862 in the latest trading, after closing near 1.3855 on Monday. The pair had briefly climbed as high as 1.3911 on August 31, its strongest level for the U.S. dollar against the loonie since mid-August.

The reversal came late in the month as portfolio hedging flows supported the Canadian currency. The loonie finished August with a gain of about 1.2%, extending its recovery for a second month.

Bank of Canada Decision Due on September 2

The next major event for USD/CAD is the Bank of Canadas rate announcement on September 2.

The central bank has kept its overnight rate at 2.25% since late 2025, including at its most recent meeting in July. Official records show no change at any of its policy meetings so far in 2026.

A recent survey of 35 economists found unanimous expectations that the rate will remain at 2.25% this week.

That leaves the wording of the Banks statement as the more likely source of movement for the Canadian dollar. Any change in its assessment of inflation, growth or future interest rates could quickly feed into USD/CAD pricing.

The Canadian economy recently showed stronger growth, with second-quarter GDP expanding at an annualized rate of 3.3%. The currency initially showed little reaction to the data, suggesting traders are waiting for a clearer signal from monetary policy before reassessing the pair.

For now, USD/CAD remains below the 1.3911 level reached on Monday, with the pair entering the Bank of Canada decision close to the middle of its recent range.

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