USD/CAD trades around 1.3900 after pulling back from all-time highs, awaits Fed decision

• USD/CAD may appreciate as the US Dollar (USD) receives support from Trump trades.
• US Treasury yields correct downward after surging to 4.31% and 4.47%, respectively, on Wednesday, their highest levels since July.
• The commodity-linked CAD receives support from the improved crude Oil prices.

USD/CAD retreats from its all-time high of 1.3958, reached in the previous session. The pair trades around 1.3900 during the Asian hours on Thursday. However, this downside of the USD/CAD pair could be limited as the US Dollar (USD) may receive support from Trump trades following the victory of Republicans in the US election.

However, the US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, pulls back from a four-month high of 105.44, recorded on Wednesday. The DXY trades around 105.00 amid a downward correction in US Treasury yields. US yields surged to their highest levels since July to 4.31% and 4.47%, respectively, on Wednesday.

US Federal Reserve's (Fed) policy decision will be eyed on Thursday, with markets expecting a modest 25 basis point rate cut in the November meeting. The CME FedWatch Tool shows a 98.1% probability of a quarter-point rate cut by the Fed in November.

The commodity-linked Canadian Dollar (CAD) might have received support from the improved Oil prices as Canada is the largest Oil exporter to the United States (USD). West Texas Intermediate (WTI) Oil price appreciates toward $72.00 at the time of writing.

A summary of the Bank of Canada's (BoC) discussions showed concerns among some officials that a large rate cut could raise fears of a deeper economic downturn. However, BoC officials emphasized that markets should not expect half-point cuts at every meeting, as future decisions will be driven by incoming economic data.