The USD/CAD pair ticks down to near 1.3940 during the European trading session on Wednesday. The Loonie pair trades with caution ahead of the monetary policy announcements by the Bank of Canada (BoC) and the Federal Reserve (Fed) at 13:45 GMT and 18:00 GMT, respectively.
Investors expect both central banks to cut interest rates by 25 basis points (bps), which will be the second straight interest rate cut in a row.
Traders are increasingly confident that the Fed will loosen its monetary policy as the impact of United States (US) tariffs on inflation is appearing to be temporary, and labor market conditions are deteriorating.
Meanwhile, Canada’s job market data for September showed signs of improvement as the economy created 60.4K fresh jobs against 65.5K lay-offs in August. However, the overall labor market trend remains sluggish as the Unemployment Rate is still higher of around 7.1%.
In the policy meetings, investors would look for cues about whether the Fed and BoC will cut interest rates again this year.
Ahead of the Fed’s policy, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 98.90.
This week, investors will also focus on the meeting between US President Donald Trump and Chinese leader Xi Jinping, which is scheduled for Thursday. Latest comments from US President Trump have signaled that both nations would reach a trade deal. “Things will work out very well with Xi tomorrow,” Trump said during the European trading session.
