News and Updates

The global economic optimism that had propelled stocks around the world to higher levels at the end of 2023 has resurfaced in February, once again driving global stock markets to reach new highs. Similar to the rally at the end of 2023, this surge is also fueled by the potential of Artificial Intelligence (AI). US equities have been at the forefront, with the S&P 500, the Dow, and the Nasdaq 100 closing at all-time highs yesterday. This renewed optimistic economic outlook has led investors to move away from safe-haven assets like the US dollar, which has underperformed. However, the Canadian dollar has not capitalized on the US dollar’s weakness.

The Canadian dollar appears to be taking a breather on Friday after a roller-coaster week. On Tuesday, the Canadian dollar sank significantly against the US dollar after the US CPI number—a closely watched barometer of inflation—came in higher than market analysts had expected. This pushed investors into a more cautious, risk-off stance, favoring safe-haven assets such as the US Dollar, to the detriment of more risk-sensitive currencies like the Canadian dollar. The Canadian dollar hit a two-month low at 1.3586 (USD/CAD).

Inflation in the US was down again in January but came in higher than what market watchers had expected. According to the US Labor Department, consumer prices rose 3.1% in January compared to 3.4% in December. Markets had anticipated the January inflation number to be at 2.9%. The higher-than-expected inflation number put investors in a sour mood and kick-started the latest round of risk-off trading. Stocks fell, Treasury yields rose, and the US Dollar gained against the Canadian dollar.

The Canadian dollar has lost about half a cent against the USD Friday overnight and into Monday morning after reaching a one-week high to end last week on strong Canadian employment numbers. The Canadian dollar was drifting higher throughout the day on improving crude oil prices after OPEC announced that they are ready to adjust prices at any time, which is code for cutting production to increase prices.