The USD/CAD currency pair rebounded from a 1-month low of 1.3671 on Tuesday ahead of the outcome of the Federal Reserve’s and the Bank of Canada’s policy meetings.
The Fed is widely expected to keep its federal funds rate target range intact at 3.50%-3.75% at its January 27th-28th meeting.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell.
The minutes from the Fed’s December policy meeting showed that officials judged rate cuts were likely to be appropriate in 2026 in case inflation subsides over time.
Yet, policy makers were divided in their assessment of risks between higher inflation and unemployment. Some FOMC members expressed greater concern that inflation becoming entrenched could require higher interest rates. Other policy makers favored a greater magnitude of rate cuts to rein in signs of a softening labor market.
At the same time, Fed Chair Jerome Powell has not offered any guidance on the timing of the next rate cut.
The FOMC signaled just one 25 bps rate cut for this year, while investors continue to expect at least two rate cuts.
Meanwhile, the Bank of Canada is expected to keep its benchmark interest rate intact at 2.25% at its January 28th policy meeting.
The minutes from the BoC’s December meeting showed that policy makers agreed the “current stance is appropriate” and noted it was “difficult to predict the timing or direction of the next rate move.”
The BoC Governing Council said it viewed the current policy rate about right to keep inflation near 2%, while supporting the economy through this period of structural adjustment.
Officials also reaffirmed that they were ready “to respond if the outlook changes materially.”
The USD/CAD currency pair was last flat on the day to trade at 1.3708.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
