USD/CAD drifts higher to around 1.4075 in Thursday’s early Asian session. Fed Chair Powell was upbeat about the US economy; US ISM Services came in weaker than expected in November. The BoC will likely cut a deeper-than-usual interest rate in its December meeting. The rising bets of the Bank of Canada rate cut and a decline in crude oil prices continue to undermine the commodity-linked Canadian Dollar .
As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down.