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The USD/CAD pair trades with mild gains around 1.3700 during the early European trading hours on Wednesday. Markets turn cautious ahead of critical interest rate decisions from both the Federal Reserve (Fed) and the Bank of Canada (BoC) later on Wednesday. Traders will closely monitor Fed Chair Jerome Powell’s remarks after the rate decision.  The Fed is widely expected to keep interest rates unchanged at its current target range of 3.50%–3.75% at the conclusion of its two-day policy meeting on Wednesday. Escalating tensions in the Middle East and oil price spikes have complicated the inflation outlook, making a rate cut highly unlikely at this time. Traders scaled back Fed easing expectations, with markets now assigning about 25 basis points (bps) of cuts this year, according to a Reuters poll. Markets will take more cues from Fed’s Powell speech, as it might offer some hints about the US interest rate path. Any hawkish comments from Fed officials could underpin the Greenback against the CAD in the near term.  The BoC is likely to hold interest rates steady at 2.25% for a third straight meeting on Wednesday as policymakers weigh the inflation risk of higher oil prices against a string of weak economic numbers. “The Bank of Canada won’t rush to respond without clarity on the size and duration of the oil price shock,” said Claire Fan, an economist with the Royal Bank of Canada.   Canadian Dollar FAQs The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more…

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Filed under: News - @ March 18, 2026 6:28 am