• USD/CAD stalls below 1.3700 after bouncing from weekly lows below 1.3600.
• The BoC is expected to leave rates at 2.25%, forecasting a short-lasting inflationary spike.
• The Fed is also anticipated to keep rates on hold with the future of Chairman Powell in question.

The US Dollar (USD) is trading practically flat against the Canadian Dollar (CAD) on Wednesday. The pair has stalled below 1.3700, after bouncing from lows sub-1.3600 earlier this week, as investors bid their time ahead of the outcomes of the Bank of Canada (BoC) and the US Federal Reserve (Fed) monetary policy meetings due later in the day.

The BoC is widely expected to leave its benchmark rate unchanged at the current 2.25%, despite higher inflationary pressures stemming from the war in the Middle East. BoC Governor Tiff Macklem affirmed earlier this month that he expects inflationary pressures to spike in the near-term, to return towards the bank’s 2% rate by the end of the year.

A few hours later, the Fed will release the decision of its last meeting with Jerome Powell at the front. The bank is also expected to leave interest rates on hold this time, and probably also during the whole 2026. The monetary policy committee, however, remains deeply divided, and the presumed next Fed Chair, Kevin Warsh, will have to cope with pressures from US President Trump to ease monetary policy.

Apart from that, Powell will have to decide whether to continue as Governor, as his term at the board extends until 2028, or leave the bank, as Trump demands. Fed chairs normally leave the bank once their four-year term expires. In this case, however, it might be different as Powell has suggested that he would remain at the bank if he sees its independence under threat.