USD/CAD maintains position near 1.4000 as expectations for further Fed rate cuts diminish

• USD/CAD remains steady amid decreasing odds of additional Fed rate cuts.
• Fed Chair Powell said that another rate cut in December is far from certain.
• The Canadian Dollar could gain support as the BoC indicated the end of its policy easing.

USD/CAD remains steady after registering gains in the previous session, trading around 1.3980 during the Asian hours on Friday. The pair appreciated as the US Dollar (USD) received support after Federal Reserve (Fed) Chair Jerome Powell's comments lowered expectations for further interest rate cuts.

The US Fed delivered a 25-basis-point rate cut on Wednesday, lowering its benchmark rate to a range of 3.75%-4.0% in a 10-2 vote. The decision was not unanimous, as Fed Governor Stephen Miran supported a larger 50-basis-point cut, while Kansas City Fed President Jeffrey Schmid voted to keep rates unchanged.

Fed Chair Jerome Powell noted that the central bank is struggling to balance its dual mandate of controlling inflation and supporting employment due to limited data availability amid the ongoing US government shutdown. Powell cautioned that policymakers may have to adopt a wait-and-see approach until official data reporting resumes. He also added that another rate cut in December is far from certain, emphasizing that the outlook remains uncertain.

The USD/CAD pair could face headwinds as the Canadian Dollar (CAD) may receive support from signs that the Bank of Canada (BoC) may be ending its policy easing cycle. The BoC lowered its interest rate by 25 basis points, bringing its policy rate down to 2.25%. The central bank described this level as "about right if inflation and activity evolve as projected," hinting that the latest cut may signal the end of its easing cycle.