USD/CAD Holds Steady at 1.4100 Amid Hawkish Fed Sentiment

The USD/CAD currency pair is hovering around 1.4100 after three consecutive days of gains, despite some cautionary signals from oil market sentiment.

A recent increase in expectations for a 25-basis-point Fed rate hike in October to 69.7%, up from 48.7% the prior week, has bolstered the US dollar's position against lower-yielding currencies.

Fed official Barr emphasized the need for further rate hikes to ensure timely return to 2% inflation, reinforcing the perception that policy may remain restrictive and supportive of the dollar.

The Canadian dollar (CAD) is holding its ground, but Scotiabank strategists warn that negative CAD seasonality in Q4 will likely lead to stronger headwinds for the currency in the coming weeks.