The USD/CAD pair traded within a narrow range around 1.4350 on Wednesday as investors stayed cautious ahead of the Federal Open Market Committee (FOMC) meeting minutes. The pair’s stability reflects a broader wait-and-see sentiment in the market, with traders looking for clarity on the Federal Reserve’s monetary policy direction.
The U.S. dollar maintained its strength, supported by expectations that the Fed will maintain a hawkish stance to combat inflation. Meanwhile, the Canadian dollar remained subdued, with weaker oil prices limiting its upside potential. As crude oil is a key export for Canada, its decline has added pressure on the loonie against the greenback.
Market participants are also watching for potential shifts in risk sentiment that could impact commodity-linked currencies. With both the dollar and oil prices in focus, the USD/CAD pair could see heightened volatility following the release of the FOMC minutes.
For now, the pair’s range-bound movement suggests traders are awaiting decisive cues from the Fed’s commentary. Any indication of prolonged rate hikes could further bolster the U.S. dollar, potentially pushing USD/CAD higher in the near term.
