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.
Another factor pushing the Canadian dollar lower is weakening oil prices. CitiBank’s commodities team has indicated that oil prices could sink significantly if OPEC+ does not continue its production cuts into 2024.
The USD/CAD pairing has been stuck in the 1.3520-1.36 range. With very little on the Canadian domestic economic calendar, more of the same can be expected until tomorrow’s Fed interest rate decision.
The Canadian dollar is currently trading at 1.3612 CAD against the US Dollar.
