Daily Updates

Canada’s job market crushed it in December 2024, adding a whopping 91,000 jobs—the best monthly gain in two years. But even with this stellar performance, the Canadian dollar (CAD) isn’t catching a break. Despite strong domestic numbers, several factors are keeping the currency stuck in a rut.

The Canadian Dollar is off to a volatile start in the New Year. On Monday, after Prime Minister Justin Trudeau announced his pending resignation, the Loonie gained some momentum, climbing nearly 1% in early trading against the U.S. Dollar. Markets viewed Trudeau’s exit as an opportunity to revitalize the Canadian economy under new leadership.

Strong Beginning, Lingering Concerns
As 2024 kicked off, the Canadian dollar seemed to be on relatively solid footing, hovering around 74 cents U.S. (1.35 CAD). A moderate rebound in oil prices—the lifeblood of Canada’s export sector—provided some tailwinds early in the year. Meanwhile, the Bank of Canada, after several interest rate hikes in 2023, appeared to be aiming for a “soft landing,” keeping inflation near its 2% target.
By mid-year, the loonie even flirted with the 76–77 cent range (1.32–1.31 CAD), fueled by steady employment numbers and decent consumer spending. Traders felt cautiously optimistic: the housing market had cooled but not collapsed, and companies in sectors like tech and mining were posting healthier-than-expected earnings.

At the start of the week, the Canadian dollar seemed to be finding its footing after hitting multi-year lows against the U.S. dollar. Positive domestic indicators, like a fourth consecutive month of rising retail sales in October and inflation ticking up to 2%, suggested that the Bank of Canada’s earlier rate cuts were finally boosting consumer spending. These signs pointed to a strengthening economy and renewed confidence in the loonie.

The U.S. Dollar continues to dominate global currency markets, driven by expectations surrounding Federal Reserve policy. Chicago Fed President Austan Goolsbee recently stressed the need for patience in cutting interest rates, citing the slow progress of inflation toward the 2% target. Speculation about potential U.S. fiscal policies—such as tax reforms and trade tariffs—has added further momentum to the Greenback. The Dollar Index (DXY) remains elevated, trading near 107.00—a level not seen since November 2023—bolstering the U.S. Dollar’s appeal.

Donald Trump’s re-election in 2024 has once again stirred financial markets, significantly impacting the USD/CAD currency pair. Much like his first term, his return to the White House has brought expectations of major policy shifts and economic initiatives, leading to immediate volatility as markets react.

Following President Trump’s decisive victory, the USD/CAD currency pair experienced a sharp spike, with the U.S. dollar reaching multi-year highs against the Canadian dollar. This surge was driven by market optimism regarding anticipated fiscal stimulus measures, including proposed corporate and personal tax cuts. However, in the two days following the election, approximately half of these gains were relinquished as investors reassessed the practical implications of such policies. The initial euphoria in risk assets observed on Wednesday and Thursday moderated, allowing the Canadian dollar to stabilize.

With President-elect Trump and a Republican-controlled Senate—and likely, the House of Representatives—the anticipated Trump economic boom is expected to amplify. The initial market reaction drove the U.S. dollar to multi-year highs against the Canadian dollar. However, as of Thursday morning, ahead of the Federal Reserve’s interest rate decision, market euphoria had tempered, allowing the Canadian dollar to stage a slight comeback.

The Canadian dollar (CAD) has faced substantial challenges in 2024, weakening by approximately 5% against the U.S. dollar (USD). This year marks the lowest point for the USD/CAD pair since 2020, and current trends indicate more downside may be lurking in the shadows. Here’s a breakdown of the factors haunting the Canadian dollar and keeping the USD strong.

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.