Daily Updates

The Canadian dollar cooled slightly and gave back some of its recent gains against the US Dollar, as well as most major currencies, on Monday. This shift occurred as investors consolidated their positions ahead of the final 2023 Canadian Consumer Price Index (CPI) announcement, expected to be released by Statistics Canada on Tuesday.

On Wednesday, the Federal Reserve held its benchmark federal funds rate steady for the third consecutive time. This effectively put the final nail in the coffin of this historic round of rate hikes, which saw rates go from near zero to the current range of between 5.25% and 5.5%, a 22-year high.

The Canadian dollar is a quarter of a penny lower against the US dollar on Tuesday morning, following US inflation data that came in slightly higher than expected. This development has dampened the mood of investors who had hoped for a lower inflation number to cement further rate cuts by the Federal Reserve (Fed) in 2024. Currently, the Fed has hinted at 50 basis points of cuts, while the market is expecting 100 basis points. Fewer cuts by the Fed mean a stronger US Dollar compared to the Canadian dollar.

The Canadian dollar is lower Monday morning against the US Dollar after touching a 2-month high on Friday following the release of better-than-expected November jobs data. The weakening of the Canadian dollar appears to be based on a broad, risk-averse investor sentiment this morning after reports that a U.S. destroyer and three commercial ships operating in the Red Sea came under attack yesterday.

Friday morning has been more of the same for the Canadian dollar, which has been grinding out small gains against the US Dollar all week, based primarily on ever-growing expectations of interest rate cuts and optimism that the global economy is headed for a soft landing. Both interest rate cuts and avoiding a prolonged and deep recession would be beneficial to the Canadian economy and the Canadian dollar. The Canadian dollar also got a boost from OPEC talks about crude oil production

With Bank of Canada Governor Tiff Macklem suggesting that interest rates may have peaked, and Federal Reserve Bank of Atlanta President Raphael Bostic expressing more confidence in the continued decline of inflation over the next year, it appears we’ve turned a corner in the historic fight against inflation. So, how will the Canadian dollar fare against the US Dollar once the Bank of Canada (BoC) and other central banks in developed economies start to cut rates? How will the Canadian dollar perform against the USD in 2024?

The Canadian dollar is making modest headway against the US dollar this morning. The Canadian dollar has been pushed up by higher crude oil prices and broad US dollar weakness as global markets continue to be buoyed by a more optimistic outlook.

Technical trading analysis shows the Canadian dollar encountering resistance at the 1.37 level and finding support at the 1.3620 level. This suggests that the Canadian dollar will fluctuate between 1.37 and 1.362 for most of this week. The next significant catalysts are expected later in the week with the release of Canadian GDP numbers and the US PCE inflation numbers for October, both due on Thursday.

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.