Over the course of this week, the Canadian dollar-US dollar pairing has been directionless, operating on limited volumes due partly to mixed economic signals and the US Thanksgiving holiday on Thursday.
Early in the week, Statistics Canada released the Canadian CPI numbers, which showed that inflation had cooled slightly more than anticipated.
Later in the week, Bank of Canada Governor Tiff Macklem indicated that, in his opinion, interest rates are “restrictive enough” to bring inflation back to the targeted range. Mr. Macklem also indicated that while it’s too early to speak about cuts, the bank does not have to wait for inflation to be down to the targeted rate of 2 percent before it begins to cut rates. At this point, most economists and market watchers agree that the bank will begin cutting rates in the second half of 2024.
The general consensus is that the Bank of Canada led the developed world in terms of increasing rates early and often, so it will most likely be the pace setter for rate cuts as well.
Other factors impacting the USD/CAD rate include the resurgence of souring global investor sentiment and sinking oil prices, which both work to weaken the Canadian dollar.
The Canadian dollar is currently trading at 1.3703 CAD against the US Dollar.
