USD/CAD falls as Fed's interest rate decision approaches
2025-09-15 13:28:29
The U.S. dollar edged lower against the Canadian dollar in Asian trading, following a slight gain in the previous session. The greenback came under pressure as a weakening U.S. labor market fueled expectations of a rate cut by the Federal Reserve at its meeting on Thursday.
Traders expect the Fed to cut interest rates by 25 basis points at its September meeting, with a small probability of a 50 basis point cut. The market also expects the Fed to continue its loose monetary policy until 2026 to address the risk of a potential recession.
According to market research, Morgan Stanley and Deutsche Bank expect the Federal Reserve to cut interest rates three times this year, by 25 basis points each in September, October and December, to cope with weakening inflationary pressures.
Investors are also watching whether Trump's economic adviser Stephen Miran will be confirmed as a member of the Federal Reserve's board of governors before the Fed's policy meeting. A full Senate vote on his confirmation is scheduled for Monday evening, which could have a certain impact on market sentiment.
In Canada, investors will be focused on CPI data due on Tuesday and the Bank of Canada (BoC) policy meeting on Wednesday. Market expectations of a possible easing policy by the BoC have increased, driven by data showing a decrease of approximately 65,500 jobs in August and a rise in the unemployment rate to 7.1%. These data are providing short-term support for the Canadian dollar.
From a technical perspective, USD/CAD is currently hovering around 1.3840, with the short-term moving average showing a mild downward trend, indicating that the US dollar is under pressure. The RSI indicator has fallen back to a neutral to low level, suggesting that bears have a slight advantage. If it falls below the 1.3820 support, it may further test the 1.3780 and 1.3750 levels.
If the rebound breaks through the 1.3900 resistance, it may resume the upward trend and test the 1.3950 mark. Overall, USD/CAD maintains a short-term range-bound fluctuation, but the downward pressure is slightly dominant.
Editor's opinion:
The main reason for the short-term pressure on the USD/CAD exchange rate is the growing expectations of a Fed rate cut and a weakening US labor market. Meanwhile, Canadian economic data shows weaker employment, providing some support for the Canadian dollar. This week, we will focus on the results of the Fed and Bank of Canada policy meetings, as well as the release of CPI data, as these events will directly determine the short-term direction of the exchange rate.
Traders expect the Fed to cut interest rates by 25 basis points at its September meeting, with a small probability of a 50 basis point cut. The market also expects the Fed to continue its loose monetary policy until 2026 to address the risk of a potential recession.
According to market research, Morgan Stanley and Deutsche Bank expect the Federal Reserve to cut interest rates three times this year, by 25 basis points each in September, October and December, to cope with weakening inflationary pressures.
Investors are also watching whether Trump's economic adviser Stephen Miran will be confirmed as a member of the Federal Reserve's board of governors before the Fed's policy meeting. A full Senate vote on his confirmation is scheduled for Monday evening, which could have a certain impact on market sentiment.
In Canada, investors will be focused on CPI data due on Tuesday and the Bank of Canada (BoC) policy meeting on Wednesday. Market expectations of a possible easing policy by the BoC have increased, driven by data showing a decrease of approximately 65,500 jobs in August and a rise in the unemployment rate to 7.1%. These data are providing short-term support for the Canadian dollar.
From a technical perspective, USD/CAD is currently hovering around 1.3840, with the short-term moving average showing a mild downward trend, indicating that the US dollar is under pressure. The RSI indicator has fallen back to a neutral to low level, suggesting that bears have a slight advantage. If it falls below the 1.3820 support, it may further test the 1.3780 and 1.3750 levels.
If the rebound breaks through the 1.3900 resistance, it may resume the upward trend and test the 1.3950 mark. Overall, USD/CAD maintains a short-term range-bound fluctuation, but the downward pressure is slightly dominant.
Editor's opinion:
The main reason for the short-term pressure on the USD/CAD exchange rate is the growing expectations of a Fed rate cut and a weakening US labor market. Meanwhile, Canadian economic data shows weaker employment, providing some support for the Canadian dollar. This week, we will focus on the results of the Fed and Bank of Canada policy meetings, as well as the release of CPI data, as these events will directly determine the short-term direction of the exchange rate.
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