The USD/CAD pair is holding steady around 1.3765 as the US Dollar strengthens. The lower crude oil prices are weighing on the Canadian Dollar, causing the pair to rise.
The US Federal Reserve is expected to keep interest rates steady in the range of 5.25%-5.50 at its June meeting on Wednesday. This decision comes after robust US employment data for May reduced expectations of a rate cut by the Federal Open Market Committee.
Traders are now pricing in a 47% chance of a rate cut in September, down from 68% before the release of the employment data. The Fed is aiming to curb inflation towards its 2% target.
The upcoming US Consumer Price Index (CPI) data will provide insight into inflation trends and future monetary policy. The CPI figures for May are expected to show a YoY increase of 3.4% and 3.5%.
On the other hand, crude oil prices are declining as OPEC ministers have indicated that they will not increase supply if prices remain weak. Canada is a major supplier of crude oil to the US, and higher oil prices typically support the Canadian Dollar.