Daily Updates

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.

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.

Global markets are on the upswing this morning after China’s central bank announced a package of measures designed to kick-start China’s sluggish economy. Most notably, the People’s Bank of China said it would cut its benchmark interest rates and lower the cash reserve requirement for banks to spur more lending. This, combined with last week’s 50 basis point interest rate cut by the Federal Reserve in the U.S., has injected more optimism into global markets.