CAD flows: Little reaction to BoC rate cut

Very little reaction to the 25bp rate cut, which was in line with expectations. Front end Canadian yields have moved slightly lower, suggesting some mild negative impulse for USD/CAD, but the USD had already made gains on the day which look hard to justify given the US data. However, the BoC did note that a tariff war with the US could be very damaging, and cut their growth forecast, warning of a big impact if Trump follows through with the threat of 25% tariffs on Canada from Saturday, especially if Canada retaliates in kind. For now, the market is assuming some sort of agreement will be reached to ward off this scenario, as USD/CAD continues to trade broadly in line with current yield spreads.