The Canadian dollar strengthened toward C$1.39 per US dollar as markets digested the Bank of Canada’s 25 basis point cut to 2.25% and, more importantly, its conditional forward guidance that frames the move as an expected endpoint to easing rather than the start of an open-ended easing cycle. Canada’s macro profile explains the caution: Q2 GDP contracted 1.6% and the labour market has softened with unemployment near 7.1% despite a one-off 60k payroll surprise, while headline CPI sits at 2.4% year on year and the Bank’s Trimmed measure runs around 3.1%. Traders therefore treated the rate cut as priced in and focused on the BoC’s message that further easing would be data dependent, a stance that caps expectations for sustained policy-driven weakness in the loonie. At the same time a softer US dollar and steady oil have eased external pressure on the currency, but persistent US trade and tariff uncertainty remains a tangible downside risk for growth and the exchange rate.