The USD/CAD currency pair traded not far from a fresh 1 1/2-week high of 1.3530 on Tuesday ahead of the outcome of the Bank of Canada’s policy meeting.
The Bank of Canada is expected to lower its benchmark interest rate by 25 basis points to 4.25% at its September policy meeting. This would extend the BoC’s rate cuts from the prior two meetings.
BoC policy makers had noted that inflation slowed in recent months, while the labor market showed signs of moderation.
Meanwhile, the US Dollar remained firm against major peers ahead of a slew of essential macro data this week, including the Non-Farm Payrolls report, which could affect the size of an interest rate cut by the Federal Reserve in September.
Employers in all sectors of the US economy, excluding farming, probably added 163,000 job positions in August, according to market consensus, following a job growth of 114,000 in July.
Markets are now pricing in about a 31% chance of a 50 basis point Fed rate cut this month and a 69% chance of a 25 basis point rate cut.
As of 9:51 GMT on Tuesday the USD/CAD currency pair was edging up 0.26% to trade at 1.3528.
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