Tuesday’s USD/CAD outlook was bearish as the resilient Canadian dollar took the spotlight, outshining the declining dollar. The dollar weakened due to expectations of potential rate cuts by the US Federal Reserve in the coming year. Meanwhile, the Canadian dollar got support from rising oil prices.
On Monday, the Canadian dollar dipped slightly against the US dollar. However, it held near its four-month peak, supported by rising oil prices and anticipation of domestic inflation data.On Friday, the loonie reached its highest level since August 4th at 1.3347. The rise resulted from the Federal Reserve’s signaling of potential interest rate cuts in the coming year, which weighed on the US dollar. Meanwhile, economists predict a slowdown in Canada’s inflation to an annual rate of 2.9% in November from October’s 3.1%. Notably, a higher inflation figure could lead the Bank of Canada to maintain current interest rates for an extended period, further strengthening the Canadian dollar. Despite growing optimism about reaching its 2% inflation target, the Canadian central bank has kept the door open for additional tightening.Elsewhere, oil, a significant Canadian export, saw a 1.5% increase, settling at $72.47 per barrel. This rise was attributed to attacks by the Iran-aligned Yemeni Houthi militant group on ships in the Red Sea, disrupting maritime trade and raising supply costs. USD/CAD key events today
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