Daily Updates

If you’re like us, you haven’t seen the inside of a retail store in months, and the Canadian dollar took a hit because of it. The Canadian dollar gave up about ½ cent against the US dollar due to weaker-than-expected retail sales in Canada. Retail numbers dropped 0.1% in February compared to the previous month. After the news, markets increased their bet that the Bank of Canada will start cutting interest rates in June to 55%, up from 50% before the report. While this is probably not the straw that breaks the camel’s back, it is yet another indication of a weakening Canadian economy and a depressed Canadian consumer.

After sinking two full cents against the US dollar last week, the Canadian dollar had gained back about half a penny in early Monday morning trading. Global markets in general are taking a breather after a statement from Iran indicated that military action has ‘concluded’. While markets are still expecting an Israeli response, for the time being, it is not a pressing concern.

The Canadian Dollar had another volatile day on Friday. The USD/CAD saw significant gains against the USD on Thursday, touching 1.3480, after Fed Chairman Powell suggested that the Fed still anticipates cutting rates this year despite the strong US economy. Then, on Friday morning, the combination of a spectacular US employment report and a weak Canadian employment report sent the Canadian dollar on a nosedive versus the US Dollar, dropping all the way down to the 1.3640 mark.

Since late December of last year, the Canadian dollar has been trading in a tight range between approximal 1.34 to 1.36 versus the US dollar. The USD/CAD currency pair has attempted numerous times to push past the 1.36 range, but it has failed to do so in a sustained manner. There are a couple of reasons why the USD/CAD pair has been trading in a tight range.

The US dollar surged this Monday after the release of the manufacturing survey, which indicated that activity in the manufacturing sector expanded for the first time in over a year…

The Canadian dollar is slowly climbing its way back up from its recent multi-month lows against the US Dollar. The Canadian dollar had fallen to 1.3614, its lowest level (CAD/USD highs) against the US Dollar since early December of 2023. In early Tuesday morning trading, the CAD was up by a quarter of a penny and overall had gained back half a penny since it hit its lowest level above-mentioned 3-month lows.

The Canadian dollar lost approximately ¾ of a penny against the US dollar this morning after Statistics Canada announced that on an annual basis, inflation dropped to 2.8 percent in February. This latest Consumer Price Index inflation reading was lower than what markets had expected.

The Canadian dollar has jumped a full cent from Wednesday to Thursday as markets reevaluate the Bank of Canada and Federal Reserve Bank’s respective stances. The market prediction late last year and into January 2024 was that the Canadian economy was on the brink of a downturn and that Canadian consumers, being as stretched as they are, would blink first, leading the BoC to take the lead over the Federal Reserve Bank in initiating the cycle of interest rate cuts. However, over the last month, the storyline has begun to flip, with Wednesday’s comments by both banks further highlighting this change. Fed Chairman Powell indicated that the Fed was planning on cutting rates as long as inflation continued its downward trend. This was the type of speech that was expected from Bank of Canada Governor Tiff Macklem. But the BoC Governor’s speech surprised analysts with its hawkish tone, in which he stated, “underlying inflation pressures persist,” indicating ongoing concerns about inflation.

The Canadian dollar experienced significant declines in December of last year, as economic data pointed to a weakening economy and overstretched consumers. In contrast, the US economy and consumers seemed to be adjusting well to higher interest rates, evidenced by a steady stream of strong economic data. Based on this, analysts had expected the Bank of Canada to begin the cycle of interest rate cuts sooner than the Federal Reserve. However, over the last month, initial indications of a slowing US economy have begun to emerge. Tuesday’s US ISM Services Purchasing Managers Index (PMI) and US Factory Orders were the latest examples of softer than expected economic news from the US. This has led market watchers to speculate that the Fed, like the Bank of Canada, may also need to cut rates sooner than initially anticipated.

The Canadian dollar and US dollar (USD/CAD) currency pairing continues to be heavily influenced by interest rate expectations. Specifically, market participants are keenly focused on when interest rate changes will…