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USD/CAD steadies as traders await FOMC minutes and Canada CPI
Markets are pricing a 63.4% chance the Fed keeps the target range at 3.50% to 3.75% at its September 16 meeting, while Canada’s July headline CPI rose to 3.0% year over year.
Traders are turning to the July Federal Open Market Committee meeting minutes on Wednesday, August 19, looking for clues on whether the Fed will prioritize cooling labor momentum or persistent inflation risks as it heads toward the September policy decision. The discussion follows the Fed’s 9 to 3 decision to keep its benchmark target range at 3.50% to 3.75%, and analysts will weigh that backdrop against recent labor data, including an unexpected drop of 23,000 jobs in July and slower hiring mentioned in CME Group analysis.
CME FedWatch pricing suggests conditional probabilities that favor maintaining or slightly adjusting the target range at the September 16, 2026 meeting, with a 63.4% chance rates remain in the 350 to 375 basis points range and a 36.6% chance they shift to 375 to 400 basis points. Looking ahead, the highest probability is for 375 to 400 basis points at the December 9, 2026 meeting.
In parallel, Canada’s July inflation data showed headline CPI accelerating to 3.0% year over year from 2.8% in June, with the Bank of Canada’s preferred core measures described as largely muted. The article links the headline increase to volatile factors tied to energy rather than broad-based price pressure.