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Canadian Dollar's Trading Day
The Canadian Dollar began the day facing challenges in comparison to its US counterpart, largely due to how falling crude prices impacted the loonie, a currency intertwined with commodities. Over the course of the day's fluctuating trading sessions, the Canadian currency encountered opposition against most major currencies. However, it successfully stood its ground when matched up against the US dollar up until the conclusion of trading hours.
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Dynamics of the US Dollar
Continuing its trend of softness, the US dollar flagged across all main currencies. This is largely due to the US Treasury yields seeing a downturn and investors recalibrating their hopes for interest rate decreases by the US Federal Reserve, especially ahead of upcoming crucial CPI data.
Market Predictions for Fed Interest Rate
Current market predictions envision five Federal Reserve rate reductions in the year 2024. Despite a freeze on reductions expected for January, analysts predict cuts to take place in March and May.
USDCAD Outlook
Scotiabank's analyst team comments on the USDCAD pair's future, pointing out, "The weekly graph depicts the formation of a bullish 'hammer' candle during the start of the year. Despite the substantial swings in USD intra-day trade on Friday last week, the USD still managed a strong close, accentuating its bullish trading pattern and reinforcing the prospects for further USD corrections in coming weeks, potentially towards 1.34/1.35. An upward push past the resistance range of 1.3390/1.3400 will enhance bullish momentum in the near term."
