The Canadian dollar has been bouncing between the 1.31 and 1.32 range on thin holiday volume trading. With a lack of economic news scheduled for this week and markets in holiday mode, oil prices and geopolitical news related to the conflict in the Middle East have been the primary drivers for the USD/CAD pairing.
Last week’s attacks on US warships and cargo ships in and around the Red Sea, along with Russia’s announcement that it would honor its commitments to supply cuts, sent oil prices higher, helping the Canadian dollar find some momentum. However, this was quickly followed by the announcement of a US-led maritime taskforce to protect commercial oil vessels against attacks. As of Tuesday morning, oil prices have given up most of their gains, and the Canadian dollar has given back some of its advances against the US Dollar.
Heading into 2024, the Canadian dollar is expected to continue to strengthen against the US dollar. According to analysts, the US dollar has reached its peak and will be on the decline against most currencies, including against the Canadian Dollar. The combination of the expectation that the Fed will be the most aggressive in cutting interest rates, and the diminishing impact of the massive economic stimulus packages.
The Canadian dollar is currently trading at 1.3229 CAD against the US Dollar.
