USD/CAD holds steady above 1.3750 ahead of BoC, Fed rate decisions

• USD/CAD flat lines around 1.3770 in Wednesday's early Asian session. 
• The Fed is widely expected to hold its key interest rate steady 
• The Fed and BoC interest rate decisions will be the highlights later on Wednesday. 

The USD/CAD pair trades on a flat note near 1.3770 during the early Asian session on Wednesday. Markets might turn cautious later in the day as traders brace for the imminent interest rate decision by the Bank of Canada (BoC) and the US Federal Reserve (Fed). 

Bloomberg reported late Tuesday that US Treasury Secretary Scott Bessent said that the US and China will continue talks over maintaining a tariff truce before the deadline in two weeks, and that US President Donald Trump will make the final decision on any extension. Trade negotiations with China have been less certain and this might undermine the US Dollar (USD) against the Canadian Dollar (CAD).

The Fed is widely anticipated to keep its key interest rate unchanged at 4.25% to 4.5%, the same as it has been since December. According to the CME FedWatch tool, Fed Funds futures traders are pricing in nearly a 97% possibility of no change to interest rates at the July meeting. 

Traders await the FOMC's policy statement and Fed Chair Jerome Powell's Press Conference afterward, as they might offer some hints about the interest rate outlook in the coming months. The cautious stance from the Fed officials amid the tariff uncertainty might help limit the Greenback's losses in the near term.

On the Loonie's front, economists expect the BoC to keep the policy rate at 2.75% at the July meeting later on Wednesday, a third consecutive pause. The Canadian central bank said its decisions would be "less forward looking" due to several "layers of uncertainty" surrounding the trade war.