• USD/CAD extends its losses despite a market caution ahead of the FOMC Meeting Minutes release on Wednesday.
• Fed Governor Michelle Bowman expressed caution on any policy changes, citing ongoing upside risks to inflation.
• The Canadian dollar appreciates despite a dovish sentiment surrounding the Bank of Canada.

USD/CAD continues its losing streak, trading around 1.3620 during the Asian session on Wednesday. The US Dollar (USD) attempts to halt its three-day losing streak as traders turn cautious ahead of the release of the FOMC Minutes on Wednesday. Furthermore, traders await Fed Chair Jerome Powell's upcoming speech at Jackson Hole on Friday.

Federal Reserve (Fed) Governor Michelle Bowman expressed caution on Tuesday about making any policy changes, citing ongoing upside risks to inflation. Bowman warned that overreacting to individual data points could undermine the progress already achieved, according to Reuters.

CME FedWatch Tool suggests that the markets are now pricing in a nearly 67.5% odds of a 25 basis points (bps) Fed rate cut in its September meeting, down from 76% a day ago. The probability of a 50 basis points rate cut fell to 32.5% from 53.0% a week earlier.

The Canadian dollar strengthened despite soft domestic data that supports a dovish stance from the Bank of Canada (BoC). Furthermore, the commodity-linked CAD managed to hold its ground, even as crude Oil prices declined.