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The CAD was on a collision course only minutes after BoC Governor Poloz indicated that policy makers were taking a step back from their hawkish rhetoric that has been in play ever since the BoE's Carney was at the helm.

The USD is ending the week beating back a wall of loonie buyers. The BoC's decision to drop its tightening bias earlier in the week has crippled somewhat the CAD outright, and this despite commodity prices getting a leg up on a vulnerable US dollar.

The BoC surprised the market mid-week by dropping the "conditional tightening bias" that had been in-play for nearly 18-months. However, changing its stance and being vocal is not a perquisite for the central bank to be cutting rates any time soon – the bar for lower rates seems to set in stone and would require a lot more warning signals from the Canadian economy for that to occur.

Be forewarned, the negative macro factors are beginning to stack up (Canadian growth issues, commodity prices, China's hard landing) and will be used to push the loonie lower in the short-term. Any ad-libbing on global growth usually has a direct impact on the commodity growth sensitive currency.

Despite consolidation and appreciation tending to usually be the order of the day – the market is now looking towards further fundamental weakness now that the CAD is closing out the week on its lows outright, extending its recent decline as fears of possible monetary tightening in China put pressure on commodity-linked currencies.

Source: This Week in FX Americas