News and Updates

The Canadian dollar continued its slide against the US dollar from Tuesday overnight into Wednesday morning, hitting a new one-month low. So far in 2024, the Canadian dollar has lost 3 ½ cents against the US dollar. However, it’s important to note that the Canadian dollar has actually held steady or even gained against most other major currencies. The slide in the USD/CAD price is largely attributed to broad US dollar strength, which, in turn, is being driven by the ongoing challenge of reducing inflation back to the coveted 2% target desired by most central banks.

According to a Statistics Canada report released on Tuesday, the Canadian Consumer Price Index (CPI) increased to an annual rate of 3.4 percent in December, up from 3.1 percent in November. Higher-than-expected inflation has been a common theme worldwide in January. Recent comments from European Central Bank officials, indicating that they do not anticipate rate cuts until late 2024, if at all, combined with last week’s higher-than-expected U.S. inflation figures, have moderated global expectations for lower interest rates. This development has been a significant factor driving investors towards the safety of the U.S. dollar, leading to its broad strengthening so far in 2024. This trend is evident in both the U.S. dollar index and the USD/CAD pairing, which have reached new monthly highs (corresponding to CAD/USD lows).

Index (CPI) showed inflation edging higher, reversing a trend of rapid deceleration seen in 2023. The CPI increased to 3.4% compared to November’s 3.1%, serving as a rude reminder to investors that the last mile in the fight to lower inflation to the Fed’s target of 2% is still ongoing. Perhaps more importantly, it gives the edge to the Fed in the game of chicken that has the markets betting big on rate cuts, while central banks continue signaling that rates may stay elevated for the foreseeable future.