USD/CAD Forecast and News
Canadian Dollar loses ground below 1.3650, eyes on Canadian CPI data
USD/CAD edges higher to 1.3630 amid the modest rebound in USD on Tuesday. The higher bets on rate cuts from the BoC and the decline in oil prices weigh on the Loonie. The higher-for-longer US rate narrative is likely to cap the pair’s downside in the near term.
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EUR/USD keeps its range above 1.0850 amid risk-off mood
EUR/USD is oscillating in a tight range above 1.0850 in the European session on Tuesday. The pair stays cautious due to risk-off sentiment and a modest US Dollar uptick, as investors weigh the ECB and Fed rate cut expectations. The focus now remains on speeches from Fed officials.
GBP/USD holds gains above 1.2700, awaits fresh catalysts
GBP/USD holds small gains above 1.2700 in European trading on Tuesday. Investors await fresh catalysts, with several Federal Reserve speakers and BoE Governor Andrew set to speak. Tuesday's Fedspeak weighed on rate cut expectations and fuelled a fresh US Dollar advance.
Japanese Yen recovers its losses, supported by a softer US Dollar
The Japanese Yen recovers its daily losses on Tuesday. Japanese Finance Minister Shunichi Suzuki voiced worries regarding the adverse effects of the weak Japanese Yen. The US Dollar edges lower due to a decline in US Treasury yields.
Gold pulls back after touching a new all-time high
Gold price (XAU/USD) retreats to the $2,410s on Tuesday as commentary from central bank policymakers around the globe reveals a reluctance to commit to lowering interest rates.
Oil eases further after string of technical rejections
Oil tests the support of its 2024 rally again on Tuesday. Markets disregard current events in the Middle East as there is no risk for output in the region. The US Dollar Index is looking for direction, caught in a tight range at the beginning of the week.
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USD/CAD YEARLY FORECAST
How could USD/CAD move this year? Our experts make a USD/CAD update forecasting the possible moves of the Canadian dollar (CAD) - US dollar (USD) pair during the whole year. Don't miss our 2024 USD/CAD forecast!
USD/CAD FORECAST 2024
2023’s comparatively quiet year in the charts, spurred by broad-market flows into and out of the US Dollar as investors grappled with Fed policy and BoC rate policy stuck in lockstep with Fed rate guidance, is set to give way to an interesting year as central bank policies see increasing risk of divergence with the Canadian economy accelerating into a recession in the first half of 2024. Read more details about the forecast.
2024 OUTLOOK FOR USD/CAD
The USD/CAD will see diverging central bank policy as a key driver through 2024, and the correlation between the Canadian Dollar and Crude Oil is likely to hold firm through the upcoming trading year. Despite musings in recent years about a shakeout in the Loonie-Crude connection, 2023 saw USD/CAD and West Texas Intermediate (WTI) US Crude Oil moving around the charts in lockstep.
The Canadian economy is expected to run into headwinds through the second half of 2024, coinciding with a global growth slowdown that could hamper Crude Oil prices next year as fossil fuels demand flounders in low-growth or recessionary environments.
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE USD/CAD
In Canada, the organizations and people that affect the most the moves of the pair are:
- Bank of Canada (BoC, Canada’s Central bank) that issues statements and decides on the interest rates of the country. Its president is Tiff Macklem.
- Canadian Government and its Department of Finance that implement policies that affect the economy of the country.
- CAPP (Canadian Association of Petroleum Producers): Canada being a prominent oil and natural gas producer, the trade organization of that industry is very important.
In the USA, we have:
- The US Government: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it, in this case, the Canadian Dollar.
- Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
In terms of economic data, we should highlight the Trade Account Balance, a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the USD/CAD. If a steady demand in exchange for CAD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the CAD.
Inflation is another economic value that is important for this pair. It is measured among others by the CPI (Core Price Index) and the PPI (Production Price Index). They are key indicators to measure inflation and changes in purchasing trends.
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
Tiff Macklem
Tiff Macklem was born in Montréal, Quebec, in 1961. He was appointed Governor of the Bank of Canada, effective 3 June 2020, for a seven-year term. He is the tenth governor of the Bank of Canada. As Governor, he is also Chairman of the Board of Directors of the Bank for International Settlements (BIS). He currently chairs both, the BIS Audit Committee and the Consultative Council for the Americas.
Macklem on BOC'S Profile and Wikipedia
BOC NEWS & ANALYSIS
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About USD/CAD
THE 'LOONIE'
THE IMPORTANCE OF OIL FOR THE LOONIE
Canada is commonly known as a resource based economy being a large producer and supplier of oil. The leading export market for Canada is by far the United States making its currency particularly sensitive to US consumption data and economical health.
ASSETS THAT INFLUENCE USD/CAD THE MOST
- Commodities: as we already explained, oil is number one, but gold and natural gas are also to be taken into account by the traders.
- Currencies: JPY and EUR. Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, an NZD/USD.
- Bonds: CSB (Canada Savings Bonds), CPB (Canada Premium Bond).
- Indices: S&P/TSX Capped Composite Index (the headline index for the Canadian equity market), S&P/TSX Global Gold Index (index of global gold securities) and S&P/TSX Capped Energy Index (benchmarks for related derivative products of Canadian economic sectors).