USD/CAD steadies at 2-week low ahead of FOMC decision

The USD/CAD currency pair held steady near a two-week low of 1.4272 on Tuesday, as market players awaited the outcome of the Federal Reserve’s two-day policy meeting to assess US economic outlook amid growing concerns of a possible economic slowdown.

The Fed is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its March 18th-19th meeting.

The minutes of the FOMC’s January meeting showed a majority of policy makers had acknowledged that the high level of uncertainty warranted a cautious approach when further adjusting monetary policy.

Many policy makers suggested that interest rates could be kept at restrictive levels in case the economy remained robust and inflation – elevated.

On the other hand, several policy makers noted that rates could be reduced if labor market conditions weakened, economic activity slowed, or inflation returned to the 2% target faster than anticipated.

Investors will be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of any future interest rate cuts.

Additionally, new FOMC economic forecasts will offer the most tangible evidence yet of how policy makers perceive the potential impact of the Trump administration’s tariff policies.

Meanwhile, CAD traders will also be looking into Canadian CPI inflation data for February due out later today.

The median CPI inflation probably remained stable at 2.7% in February, according to market consensus.

The trimmed-mean core inflation rate, the Bank of Canada’s preferred measure of underlying inflation, probably rose to 2.8% in February from 2.7% in January.

The USD/CAD currency pair was last little changed on the day to trade at 1.4288.