Credit Agricole CIB Research discusses USD/CAD outlook into the October BoC decision on Wednesday.

"Overall, USD-CAD rate differentials have only come off modestly from their recent highs, and therefore the USD/CAD retracement may at this stage struggle to have much longer legs beyond 1.40.

It would especially require obvious hawkish tilts from the BoC when it meets on Wednesday, whereas we rather see the bank refraining from clearly telegraphing extra rate hikes, to instead stick to an open and flexible stance. Aside from that, today’s Canadian retail sales should not give the CAD much of a fillip, even though reassurance that Canadian consumers have not curtailed spending could be welcomed," CACIB notes.

"All in all, after rejecting the attempt to reestablish itself around the 1.44 pivot that prevailed in Q125, USD/CAD could then focus in the near term on holding up near the 1.40 handle," CACIB adds.