The US Dollar has started 2024 with a bang, hitting a weekly high against the Canadian Dollar on Tuesday morning. The US Dollar was experiencing broad gains, with the Dollar Index – a measure of the U.S. currency against six major currencies – up by 0.67% at 102.05, marking the biggest daily percentage gain since October.
The Dollar Index had fallen by 2 percent in late 2023, driven by increasing investor expectations that the Federal Reserve would aggressively cut interest rates this year. Meanwhile, the US economy maintained its relative strength and experienced a soft landing.
Market analysts speculated that the broad upward movement of the US Dollar was primarily due to an uptick in US Treasury yields and short-term opportunistic profit-taking by investors. These investors aimed to capitalize on overvalued risk-based assets, such as the Canadian Dollar.
Overall, the Canadian Dollar is expected to strengthen in 2024. The interest rate easing cycles by both the Bank of Canada and the Federal Reserve are anticipated to stimulate the global economy. This is likely to be beneficial to the export-dependent Canadian economy and bolster the Canadian Dollar.
The Canadian dollar is currently trading at 1.3316 CAD against the US Dollar.
