USD/CAD ticks up to near 1.3850 in countdown to BoC-Fed monetary policy

USD/CAD edges higher to near 1.3850 ahead of Canada-US interest rate policy.
The BoC is expected to leave interest rates unchanged at 2.25%, while the Fed seems to cut them by 25 bps.
US employers posted 7.67 million fresh jobs in October, unexpectedly higher than the former reading of 7.658 million.

Sagar Dua FXStreet

The USD/CAD pair trades marginally higher to near 1.3855 during the Asian trading session on Wednesday. The Loonie pair is expected to trade broadly sideways as investors await monetary policy announcements by the Bank of Canada (BoC) and the Federal Reserve (Fed), which are scheduled for the North American session.

At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 99.25, following an upside move the previous day. The DXY attracted bids on Tuesday after the release of the surprisingly upbeat United States (US) JOLTS Job Openings data for October. The data showed that fresh jobs posted increased marginally to 7.67 million from 7.658 in September, while they were expected to come in lower at 7.2 million.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December policy meeting is 87.6%. This would be the third interest rate cut by the Fed in a row.

Assuming that the Fed is almost certain to ease interest rates further, the major highlight of the central bank’s monetary policy will be the Economic Projections report. The report will provide fresh estimates for inflation, growth and unemployment, and the Fed’s dot plot, which shows where policymakers collectively see Federal Funds Rate heading in the medium and longer term.

Meanwhile, the BoC is expected to hold interest rates steady at 2.25% amid signs that Canada’s labor market is regaining ground. In the September-November period, the Canadian economy has created 180.6K fresh jobs after releasing 106.3K workers in the July-August period. The Unemployment Rate has also fallen to 6.9% in November from 6.5% in October.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD consolidates near 0.7000 as USD stays weak

AUD/USD holds steady above 0.7000 during Thursday’s Asian session, consolidating the previous day’s recovery gains from a near three-week low as the Democratic sweep in the US midterm elections and Iran diplomacy hopes continue to weigh on the US Dollar. Bulls, however, seem hesitant as focus shifts to Friday’s crucial US NFP report.

USD/JPY drifts lower to 158.25 on hawkish BoJ Minutes, weak USD

USD/JPY trades with a negative bias for the second straight day on Thursday as hawkish BoJ Minutes, showing members agreed to keep raising rates, and intervention risks support the Japanese Yen. Meanwhile, US midterm election results and hopes for Iran diplomacy keep the US Dollar depressed as focus shifts to Friday’s US NFP report.

Gold eases from two-week top; holds comfortably above $4,100

Gold retreats slightly from a two-week high touched during Thursday’s Asian session, albeit it clings to gains for the second straight day and currently trades around $4,130. The US Dollar extends the fallout from US election results, dropping to a fresh low since late September and assisting the commodity in building on the previous day's strong rally of over 3.5% – its biggest single-day rise since mid-August.

TRUMP token hits record low amid mounting selling pressure

Ripple and Stellar extend their recovery as bearish pressure begins to ease for both altcoins. XRP trades above $1.30 after breaking above the upper trendline of a falling channel pattern, while XLM holds above $0.168 and approaches resistance at $0.173. Meanwhile, improving derivatives metrics and strengthening momentum indicators hint at a potential for further recovery.

BoE expected to hike interest rate to 4.00%

The Bank of England is set to reveal its latest monetary policy decision on Thursday, coinciding with its seventh rate-setting meeting of 2026. Market analysts expect the ‘Old Lady’ to increase its policy rate by a quarter percentage point to 4.00%, the highest level since November 2025.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.