USDCAD holds positive ground above 1.3650, eyes on BoC rate decision

• USDCAD edges higher to 1.3678 in Wednesday’s early Asian session.
• The BoC is anticipated to cut its overnight rate to 4.75% at its June meeting on Wednesday.
• JOLT's Job Openings declined from 8.355M to 8.059M in April, worse than expected.

The USDCAD pair trades stronger on the day around 1.3678 in the early Asian session on Wednesday. The downtick of the pair is pressured by the softer US Dollar (USD) to reach the 104.00 support level on Tuesday. The Bank of Canada's (BoC) interest rate decision on Wednesday will be in the spotlight.

The BoC has kept its policy rate on hold at 5.0% since July 2023, and the markets expect the BoC to cut its overnight rate by 25 basis points (bps) to 4.75% due to signs of cooling inflation in Canada. The BoC Governor Tiff Macklem said during the last rate meeting that an initial cut in its June meeting would be “within the realm of possibilities.”. If the Canadian central bank decides to lower its borrowing costs in the June meeting, this could widen the divergence of policy rates between the BoC and Fed, which might exert more pressure on the Greenback. Meanwhile, the rise in crude oil prices could undermine the commodity-linked Loonie, as Canada is the largest oil exporter to the United States.

On the USD’s front, the poor inflation readings earlier this year prompted speculation that the Fed will cut rates from September this year. Traders in derivative markets expect only a 14% chance of a rate cut in July, but it's just above 50% for September, according to the CME FedWatch tool. The Fed will hold the next monetary policy meeting again on July 30-31. On Tuesday, the US JOLTs Job Openings declined from 8.355 million to 8.059 million in April, below the market consensus of 8.34 million.