FOMC Minutes and BoC CPI Data to Shape Market Expectations

The upcoming FOMC minutes on August 19 will provide insight into whether the Fed prioritizes cooling labor market momentum or persistent inflation risks. Market participants are examining the text to determine the central bank's decision at the September meeting, following its 9-3 decision to keep the benchmark target range at 3.50%-3.75%. According to the CME FedWatch Tool, traders are pricing in conditional meeting probabilities that favor maintaining or slightly adjusting the benchmark interest rate target range.

As of August 17th, 2026, market expectations for Federal Reserve policy rates reflect a shift toward a higher-for-longer regime driven by persistent inflation concerns and economic resilience. The highest probability shifts to the 375-400 basis points range for the September 16 meeting, with a 63.4% chance it will settle in this range.

The Bank of Canada's (BoC) Consumer Price Index (CPI) report showed that headline inflation accelerated to 3.0% year-over-year in July, while core inflation metrics remained largely muted. The jump in headline inflation reduces the immediate likelihood of a rate cut or hike at the BoC's upcoming September 2 meeting.

On the technical front, USD/CAD price action is testing a critical support confluence formed by the long-term SMA200, monthly S2, and weekly S1. With the RSI indicating oversold conditions at 29.24, analysts are cautious on the potential for a rebound in the currency pair.