CAD Edges Higher Ahead of Federal Reserve Decision
The Canadian Dollar is edging higher as traders wait for the Federal Reserve's interest rate decision, but its upside remains limited by the decline in Oil prices.
The USD/CAD exchange rate is trading near 1.4105 on Tuesday, down 0.14% on the day, but still close to its recent highs as markets expect the Fed to leave interest rates unchanged.
Strategists at Scotiabank note that the Canadian Dollar is holding little changed against the Greenback, with the bank observing that 'the CAD is holding little changed against the generally stronger USD.'
The real constraint on the CAD comes from wide short-term interest rate differentials relative to the USD, and a Fed hold tomorrow may allow the CAD to improve a little but scope for improvement is limited absent a significant narrowing in rate differentials.