- USD/CAD edges lower as the US Dollar struggles on dovish comments from Fed officials.
- Fed Chair Jerome Powell said that the central bank is on track to deliver another 25-basis-point rate cut in October.
- The commodity-linked CAD may decline as Oil prices face challenges on the oversupply outlook in 2026.
USD/CAD loses ground after two days of gains, trading around 1.4030 during the Asian hours on Wednesday. The pair loses ground as the US Dollar (USD) declines after the dovish Fedspeak. Traders will likely observe speeches from US Federal Reserve (Fed) officials, including Stephen Miran, Christopher Waller, and Jeff Schmi,d later in the day.
Fed Chair Jerome Powell stated on Tuesday that the central bank is on track to deliver another quarter-point interest-rate reduction later this month, even as a government shutdown significantly reduces its read on the economy. Powell highlighted the low pace of hiring and noted that it may weaken further.
Boston Fed President Susan Collins claimed that the policy is not on a preset path; some scenarios would keep rates steady, and that policy would remain restrictive even with more easing. The CME FedWatch Tool indicates that markets are now pricing in nearly a 94% chance of a Fed rate cut in October and a 93% possibility of another reduction in December.
The USD/CAD pair may regain its ground as the commodity-linked Canadian Dollar (CAD) could face challenges due to subdued crude Oil prices. West Texas Intermediate (WTI) Oil price remains weaker for the second successive session, trading around $58.20 at the time of writing. Crude Oil prices declined as the International Energy Agency (IEA) warned of an Oil supply surplus in 2026.
