The Canadian dollar (CAD) has experienced significant fluctuations throughout 2024, shaped by both domestic and international economic developments. As we move into the final quarter of the year, the CAD is grappling with a complex mix of factors ranging from domestic economic data to global market movements. This update will review the key catalysts that have influenced the CAD so far and provide an outlook for what traders and investors can expect in the coming months.

The Canadian dollar is trading around the 1.3650 mark, hitting multi-week lows against the U.S. dollar. Overall, the Canadian dollar has weakened by two full cents over the past two weeks.

The USD/CAD pair continues to trend modestly lower, with the Canadian dollar moving higher after recovering from its dip into the low 1.34 range last week, the lowest level seen since early March. This movement is primarily driven by broad weakness in the U.S. dollar rather than a surge in Canadian dollar strength, as global events send mixed signals.

The Canadian dollar is relatively stable in early Wednesday morning trading, after slipping into the 1.345 range yesterday. Bank of Canada Governor Tiff Macklem continued to express confidence in the Bank’s ability to bring inflation back to its 2% target. His comments, unsurprisingly, were interpreted as dovish by market watchers. The BoC’s next policy interest rate decision is set for October 23, according to Reuters money markets predicting a 60% chance of a 50-basis-point cut, double the usual 25-basis-point reduction. A further 25-basis-point cut is expected in December.