Feds Eye Rate Decision Amid Inflation Worries
The upcoming Federal Reserve meeting minutes on August 19 are expected to provide insight into the central bank's decision-making process following its recent rate-keeping decision. Market participants will examine the text for clues on whether persistent inflation risks or cooling labor market momentum will influence future interest rate moves.
According to the CME FedWatch Tool, market expectations favor maintaining or slightly adjusting the benchmark interest rate target range. As of August 17th, 2026, there is a 63.4% probability that the target rate will settle in the 3.50%-3.75% range for the September 16 meeting.
In related news, Canada's Consumer Price Index (CPI) report showed headline inflation accelerating to 3.0% year-over-year in July, driven by energy costs. However, core inflation metrics remained largely muted, suggesting that the increase was due to volatile factors rather than broad-based price pressures.
The Bank of Canada is expected to hold rates at 2.25% on September 2, despite the jump in headline inflation. Meanwhile, the USD/CAD price action is testing a critical support confluence formed by long-term SMA200 and weekly S1 levels, with an RSI indicating oversold conditions.