USD/CAD extends upside to near 1.3950, Fed rate decision in focus

• USD/CAD gains momentum to around 1.3940 in Thursday's early Asian session. 
• The victory of Republican candidate Donald Trump in the US presidential election lifts the Greenback.
• BoC officials worried that the jumbo rate cut would be a sign of economic trouble. 

The USD/CAD pair extends the rally to near 1.3940 during the early Asian session on Thursday. The uptick of the pair is bolstered by the strengthening of the US Dollar (USD) broadly after Republican candidate Donald Trump won the US presidential election. All eyes will be on the US Federal Reserve (Fed) interest rate decision on Thursday. 

The Greenback edges higher as investors bet that lower taxes and raising tariffs will push up inflation and reduce the pace of interest rate cuts as Trump was elected US president. Later on Thursday, attention will shift to the Fed monetary policy meeting. The US central bank is widely anticipated to cut the benchmark interest rate by 25 basis points (bps) at its meeting ending on Thursday. However, traders have begun to trim bets for a reduction in December and the number of rate cuts expected next year, according to CME's FedWatch tool.  

On the Loonie front, the Bank of Canada (BoC) decided to cut its benchmark interest rate by 50 bps at its October meeting, bringing the policy rate down to 3.75%. A summary of the BoC deliberations showed worry among some officials that an oversized step of a rate cut would spark fears that a steeper economic contraction may be coming. However, the BoC officials stated the markets should not necessarily expect half-point cuts at every meeting going forward as future decisions would be guided by incoming data.