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USD/CAD holds near two-week highs as investors await the Fed

The move is tied to expectations the Fed will keep rates unchanged, while softer oil prices and a dovish Bank of Canada outlook weigh on the Canadian dollar.

Reported · Written up by our desk · Major Pairs

USD/CAD is consolidating near a two-week high after touching that level during the Asian session, around 1.4120, FXStreet reports. The price action reflects a supportive macro backdrop for further USD/CAD gains, although traders are holding back ahead of a two-day FOMC policy meeting.

FXStreet notes that the Fed is expected to leave interest rates unchanged on Wednesday, putting the spotlight on the policy statement and the post-meeting press conference, including comments that could clarify the future policy path. DBS Group Research adds that investors are not comfortable repricing rates lower just yet, even as oil prices have corrected lower.

In the background, FXStreet points to shifting US-Iran conflict headlines that have kept broader sentiment unsettled. The outlet also links the Canadian dollar's weakness to the recent crude oil slump to a one-week low, plus a dovish bias from the Bank of Canada and trade war fears.

FXStreet says key drivers for CAD include the level of Bank of Canada interest rates, oil prices, Canada’s economic health and inflation, and the trade balance between exports and imports, alongside risk sentiment and spillovers from US growth given the US is Canada’s largest trading partner. With the USD Index steady near a monthly high, the next catalysts are likely to come from the Fed meeting outcomes.

Latest closeWTI crude $81.92 ▼8.3%

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