If Canada raises interest rate near soon and American's Federal reserve lowers their interest rate, is USD/CAD likely go up or down?
Ignored
it would result in the currency that is being lowered losing value, and the currency being raised increasing in value. So in your example, without any other factors, the dollar would fall, so you'd short this pair.
Certain pairs, such as USDCAD can be affected by other things. In this case it would be the price of oil. US imports a high % of Canadian shale oil, so even if interest rates are favourable to the $ it could still fall against the Canadian $.
