USD/CAD trades with positive bias below 1.3700; looks to FOMC minutes for fresh impetus
- USD/CAD attracts some dip-buyers on Wednesday amid a broadly firmer USD.
- Fed rate cut bets and trade jitters continue to benefit the safe-haven Greenback.
- Subdued Oil prices do little to influence the Loonie or dent the pair’s bullish tone.
The USD/CAD pair regains positive traction during the Asian session on Wednesday and climbs to the 1.3700 neighborhood, closer to over a one-week high touched the previous day. Moreover, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside.
Investors now seem convinced that US tariffs will eventually feed through into higher prices and allow the Federal Reserve (Fed) to keep interest rates elevated for an extended period. Adding to this, concerns about the potential economic fallout from US tariffs temper investors' appetite for riskier assets. This assists the safe-haven US Dollar (USD) to stand firm near a two-week top touched on Tuesday and acts as a tailwind for the USD/CAD pair.
Meanwhile, US President Donald Trump vowed to further escalate his trade wars by imposing up to 200% on foreign drugs and 50% on copper. Given that the US is by far the largest destination for Canadian copper, Trump's fresh threats undermine the Canadian Dollar (USD) and turn out to be another factor offering support to the USD/CAD pair. Furthermore, subdued Crude Oil prices might do little to benefit the commodity-linked Loonie.
This, in turn, validates the near-term positive outlook for the USD/CAD pair and backs the case for a meaningful appreciation in the near term. The USD bulls, however, might opt to wait for more cues about the Fed's rate-cut path before placing fresh bets. Hence, the focus will remain glued to the release of FOMC meeting minutes later during the US session, which will drive the USD demand and provide a fresh impetus to the USD/CAD pair.
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed Jul 09, 2025 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
