The USD/CAD currency pair has encountered resistance just below the 1.3700 mark, following a rebound from weekly lows that dipped beneath 1.3600. The Bank of Canada is anticipated to maintain interest rates at 2.25%, projecting a temporary inflationary surge. The Federal Reserve is expected to maintain its current interest rates, amid uncertainties surrounding Chairman Powell’s future. The US Dollar is trading practically flat against the Canadian Dollar on Wednesday.
The pair has stalled below 1.3700, following a rebound from lows beneath 1.3600 earlier this week, as investors exercise caution in anticipation of the outcomes from the monetary policy meetings of the Bank of Canada and the US Federal Reserve scheduled for later today. The Bank of Canada is anticipated to maintain its benchmark interest rate at 2.25%, even in the face of escalating inflationary pressures resulting from the conflict in the Middle East. BoC Governor Tiff Macklem confirmed earlier this month that he anticipates inflationary pressures to surge in the short term, ultimately converging towards the bank’s 2% target by year-end.
A few hours later, the Federal Reserve will announce the outcome of its most recent meeting, with Jerome Powell at the helm. The bank is anticipated to maintain interest rates at their current levels this time, and likely throughout 2026 as well. The monetary policy committee, however, exhibits significant internal divisions, and the anticipated successor to the Fed Chair, Kevin Warsh, will face considerable pressure from US President Trump to adopt a more accommodative monetary stance.
In addition to that, Powell faces the decision of whether to remain as Governor, given that his term at the board lasts until 2028, or to depart from the bank, as requested by Trump. Typically, Fed chairs conclude their tenure at the bank upon the expiration of their four-year term. In this instance, however, the situation may differ as Powell has indicated that he would continue at the bank should he perceive any threat to its independence.