During Thursday’s North American trading hours, the USD/CAD pair rose to around 1.3820. Despite the significant buying of the US Dollar (USD) following the release of the United States (US) ISM Manufacturing Purchasing Managers’ Index (PMI) data, the Loonie pair saw a slight increase. The US Dollar Index (DXY) has risen by approximately 0.5% to above 100.00, even as the agency reported a faster decline in manufacturing activities. The Manufacturing PMI for April was 48.7, lower than the March reading of 49.0 but higher than the predicted 48.0. A figure below 50.0 indicates a contraction in economic activity.

The future does not look promising for the US Dollar amid ongoing uncertainty surrounding trade relations with China. According to comments from the White House, there have been no trade discussions between the two nations since the implementation of reciprocal tariffs. The South China Morning Post (SCMP) reported that US Trade Representative Jamieson Greer said in an interview with Fox News on Wednesday that discussions with Beijing have yet to begin.

In Canada, investors are awaiting insight on whether the Bank of Canada (BoC) will reduce interest rates again at the June policy meeting. The BoC minutes from the April meeting, released on Wednesday, revealed that the central bank maintained interest rates at 2.75%, citing uncertainty over the economic outlook following additional tariffs announced by US President Donald Trump on April 2. This was the first time in seven consecutive rate cuts that the BoC has left borrowing rates unchanged.

The BoC minutes also showed that policymakers believe the impact of previous rate cuts is still to be felt in the economy, and therefore, easing monetary policy at this stage could have been premature. Reuters reported that the minutes also stated the central bank’s willingness to remain flexible with monetary policy adjustments until “medium- to long-term inflation expectations remained anchored”.