The Canadian dollar weakened toward C$1.4 per US dollar, as a firm US dollar driven by growing bets that the Federal Reserve will keep policy rates higher for longer overwhelmed any short-lived hawkish signals from the Bank of Canada. Markets largely treated the BoC’s recent cut as priced in and shifted instead to its data dependent guidance, which narrowed the odds of further accommodation and pushed domestic yields up but not enough to compensate for the dollar’s strength. At home a weak macro backdrop compounds the pressure with Q2 GDP contracting about 1.6% and the labour market softening despite a one off 60,000 payroll gain that left unemployment near 7.1%, while inflation remains elevated with headline CPI around 2.4% year on year and the Bank’s trimmed measure near 3.1%. Softer commodity signals and lingering US Canada trade and tariff frictions together with Ottawa’s outreach to Asia to diversify ties keep external risks elevated and limit the loonie’s external support.