USD/CAD trades firmer above key support at 1.3800 as markets await the Fed’s decision, while the Bank of Canada is widely expected to hold rates at 2.25%, with swaps pricing a potential 25bps hike over the next year supporting the Canadian Dollar (CAD), BBH FX analysts report.

BOC expected to keep rates steady at 2.25%

"USD/CAD is firmer above key support at 1.3800. Today’s Fed outcome will dictate whether USD/CAD clears that support stalls above it. The Bank of Canada (BOC) is widely expected to keep rates on hold at 2.25% (2:45pm London, 9:45am New York). The BOC will likely emphasize again that it 'sees the current policy rate at about the right level to keep inflation close to 2%'."

"No Monetary Policy Report or press conference will accompany this meeting. The swaps market implies a full 25bps rate increase to 2.50% over the next twelve months, which bodes well for CAD."