• USD/CAD rebounds on reluctance of Fed commentators to endorse near-term interest-rate cuts. 
• The pair had been weakening after higher-than-expected inflation in Canada stopped the BoC from beginning its easing cycle. 
• USD/CAD lacks directionality on the charts and has declined since making a false breakout higher in early June. 

USD/CAD edges higher on Wednesday, trading in the 1.3680s as the US Dollar (USD) firms up on commentary from several Federal Reserve (Fed) rate-setters, that overall suggests the US central bank is reluctant to cut its main interest rate, the Fed Funds rate, due to insufficient progress being made on lowering inflation. 

This is viewed as positive for the US Dollar (and USD/CAD), because keeping the Fed Funds rate high leads to greater foreign capital inflows, from investors seeking returns. 

Market gauges of the trajectory of Fed rate policy, however, are signaling a more optimistic roughly 66% probability of the Fed cutting interest rates at or before its September meeting. Estimates are based on the CME FedWatch tool, which uses the price of Interest Rate (Fed Funds) Futures for its calculations. 

USD/CAD’s rebound comes after a period of weakness for the pair during which investors revised their expectations of the path of Bank of Canada (BoC) monetary policy. From previously expecting the BoC to begin a cycle of interest rate cuts due to declining inflation in Canada they now see the BoC holding its policy rate at the current level – much like the Fed