USD/CAD is trading 0.12% lower near 1.4080 during the Asian trading session on Wednesday. The Canadian pair faces slight selling pressure as the US Dollar (USD) trades cautiously amid growing speculation that the Federal Reserve (Fed) may cut interest rates at its December monetary policy meeting.
At press time, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, is holding onto Tuesday’s losses near 99.70.
US dollar price today
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed today. The US dollar was weakest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.16% | -0.19% | -0.16% | -0.13% | -0.40% | -1.19% | -0.14% | |
| euro | 0.16% | -0.05% | -0.02% | 0.00% | -0.26% | -1.04% | 0.00% | |
| GBP | 0.19% | 0.05% | 0.02% | 0.06% | -0.20% | -0.99% | 0.06% | |
| JPY | 0.16% | 0.02% | -0.02% | 0.03% | -0.23% | -1.03% | 0.03% | |
| Canadian | 0.13% | -0.01% | -0.06% | -0.03% | -0.28% | -1.07% | -0.00% | |
| Australian dollar | 0.40% | 0.26% | 0.20% | 0.23% | 0.28% | -0.80% | 0.27% | |
| New Zealand dollar | 1.19% | 1.04% | 0.99% | 1.03% | 1.07% | 0.80% | 1.07% | |
| Swiss franc | 0.14% | -0.01% | -0.06% | -0.03% | 0.00% | -0.27% | -1.07% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points to 3.50%-3.75% at the December meeting rose to 85.3% from 50.1% seen a week ago.
The Fed’s dovish bets intensified after New York Chairman John Williams’ comments on Friday that suggested he could support interest rate cuts at the December policy meeting.
“I see monetary policy as modestly constrained, although somewhat less so than before our recent actions,” Williams said, adding that there is room for further adjustment in the near term. Williams supported the need for further expansion of monetary policy, noting that “economic growth has slowed and the labor market has gradually cooled.”
Aside from Fed’s dovish monetary policy guidance from Williams, benign data in the US also weighed on the US dollar. Core inflation in the United States — which excludes volatile food and energy — slowed and retail sales rose moderately in September, data showed Tuesday.
Meanwhile, the Canadian Dollar (CAD) is trading broadly calm amid expectations that the Bank of Canada (BoC) will hold interest rates in the near term. At its October monetary policy meeting, the Bank of Canada signaled the end of the monetary expansion cycle after cutting interest rates by 25 basis points to 2.25%.
Contrary to the Bank of Canada’s comments, analysts at Citi expect further interest rate cuts in 2026, noting that growth and inflation could be weaker than expected next year.
Federal Reserve Bank Questions and Answers
Monetary policy in the United States is shaped by the Federal Reserve Bank (Fed). The Federal Reserve has two missions: achieving price stability and promoting full employment. The primary tool for achieving these goals is adjusting interest rates. When prices rise too quickly and inflation is above the Fed’s 2% target, it raises interest rates, which increases borrowing costs throughout the economy. This causes the US dollar (USD) to strengthen because it makes the United States a more attractive place for international investors to park their money. When inflation falls below 2% or when the unemployment rate is very high, the Fed may lower interest rates to encourage borrowing, which affects the dollar.
The Federal Reserve (Fed) holds eight policy meetings annually, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC meeting is attended by twelve Fed officials – the seven members of the Board of Governors, the New York Fed president, and four of the remaining eleven regional Fed presidents, who serve one-year terms on a rotating basis.
In extreme cases, the Fed may resort to a policy called quantitative easing (QE). Quantitative easing is the process by which the Federal Reserve dramatically increases the flow of credit into a stuck financial system. It is a non-standard policy measure used during crises or when inflation is very low. It was the Fed’s weapon of choice during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. Quantitative easing usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process of quantitative easing, where the Fed stops purchasing bonds from financial institutions and does not reinvest capital from bonds it holds outstanding, to purchase new bonds. This is usually positive for the value of the US dollar.
