On October 7, global FX markets are focused on tonight's release of the Federal Reserve's September 15–16 meeting minutes. At that meeting, the Fed raised rates to fight inflation; tonight's minutes will reveal the divisions behind the decision and the wording on the future policy path — a key variable for the dollar's near-term direction.
The dollar index held around 101.94, after a 0.27% slide in the previous session. USD/CAD traded in a 1.4240–1.4261 range, with the loonie staying near an 18-month low — 1 CAD worth about 0.7015–0.7023 USD, down roughly 3.3% from 30 days ago.
Market pricing shows the CME FedWatch tool implying about an 85% probability of another hike in December. But last week's softer-than-expected US PCE inflation and nonfarm payrolls data have reduced the sense of urgency — the direct reason behind this week's dollar pullback.
1. Why These Minutes Matter
The September hike itself was expected; the real story is the “divisions” in the minutes. How officials disagreed on sticky inflation and the pace of labor-market cooling will show up in the wording — hawkish language lifts the dollar again; dovish language extends its slide.
For the Canadian dollar, the dollar's direction is USD/CAD's direction. The policy divergence between the Fed and the Bank of Canada is widening: Canada's economic outlook is softer and inflation pressures more contained, giving the BoC less reason to follow the Fed higher. The rate differential favors the greenback — the fundamental reason the loonie sits near an 18-month low.
In other words, every wording nuance in tonight's minutes will travel through the dollar into the loonie, and then into RMB/CAD quotes.
2. Rebounding Oil Puts a Floor Under the Loonie
The loonie hasn't broken lower thanks largely to oil. Crude bounced from a one-month low as geopolitical risk premiums rebuilt: Yemen's government claimed strategic points along the Red Sea coast, Houthi forces retaliated against targets inside Saudi Arabia, and Iran stepped up attacks in the Strait of Hormuz over the past week.
Data: 30 days ago USD/CAD 1.3805; 7 days ago 1.4243; today 1.4240–1.4261.
As a classic commodity currency, the loonie draws support from firmer oil, capping USD/CAD's upside. One caution: this support comes from geopolitical risk — it arrives fast and can leave just as fast. Don't read it as a trend reversal.
KAPU's Take
Volatility in FX markets often spikes around the minutes release. For anyone with real RMB-to-CAD needs — tuition payments, family transfers, property closings, or business settlement — we suggest not betting on a one-sided outcome. Watch the actual RMB/CAD quote, plan your funding ahead, and leave enough time for identity verification, source-of-funds review, and bank processing.
KAPU's live rates update throughout the day at kapu.ca/rates, with cash/non-cash and note/draft prices quoted separately. Visit our Richmond store on the 2nd floor of Central Square (Google rating 4.8), or reach us at [email protected].
