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.
In just the past week, the United States, Canada, and now the United Kingdom have all reported inflation ticking higher. While this increase was somewhat anticipated, it has reinforced the stance of central banks that interest rates will remain higher for longer and that it’s too early to consider cuts.
Other factors contributing to the broad strength of the US dollar include negative economic news coming out of China and expanding geopolitical tensions in the Red Sea. Both of these developments have pushed investors into a ‘risk-off’ mindset, aiding the US dollar’s gain in value against the Canadian dollar, which is considered a risk-sensitive currency.
The Canadian dollar is currently trading at 1.3514 CAD against the US Dollar.
