At the start of the new week, the USD/CAD pair has lured dip-buyers, halting its corrective decline from last Thursday’s high, the loftiest since March 2020. In the first half of the European session, spot prices cling to minor intraday gains, trading around 1.4380, up less than 0.10% on the day.
The US dollar has recaptured positive momentum. After pulling back on Friday from a two-year peak, the Fed’s hawkish pivot – indicating a slower pace of rate cuts in 2025 – has buoyed the dollar. This stance props up elevated US Treasury bond yields, giving the greenback a significant boost. In contrast, the Canadian dollar is under pressure. Domestic political developments and the Bank of Canada’s (BoC) dovish stance are taking a toll. The BoC forecasted sluggish growth for the year’s final quarter and flagged the threat of new US tariffs on Canadian exports, clouding the economic outlook. Moreover, Statistics Canada’s data showed October retail sales slightly below expectations and likely flat in November.
Despite an increase in crude oil prices, which typically benefits the commodity-linked loonie, the Canadian dollar hasn’t gained enough traction to impede a modest upward move in the USD/CAD pair. Traders are now eyeing the release of the Conference Board’s US Consumer Confidence Index, as this, along with US bond yields, could sway the dollar. Oil price fluctuations may also create short-term trading chances for the pair. Overall, the fundamental situation seems to favor the US dollar bulls, enhancing the prospects of prolonging the uptrend seen over the past couple of months.
Related topics:
US Dollar’s Trajectory After Fed’s Hawkish Stance on 2025
Pound Sterling Tumbles Post-BoE’s Steady Interest Rate Decision
Gold Under Pressure Ahead of Fed Policy Decision Amid Mixed Signals
