Canadian Dollar Is On A Rampage
London: 20 December 2023 (TraderMade): The Canadian dollar (CAD) is on a rampage, sending the US dollar (USD) tumbling to new multi-month lows near 1.3300.
At about 11:38 AM GMT, the USDCAD pair dipped by 0.46% to 1.3337 - compared to its Monday close.
Let us analyze the reasons
Sticky inflation: Canada's November CPI unexpectedly stayed above 3%, defying expectations and bolstering the Bank of Canada's (BoC) hawkish stance against rate cuts.
Oil bonanza: Rising oil prices, fueled by supply concerns and Suez Canal woes, benefit Canada, a major oil exporter, and boost the CAD.
USDCAD Chart by TraderMade - from 1 December 2023 (4 Hour Interval)
Fed dovish bets: With investors convinced of early 2024 Fed rate cuts, the USD finds itself under heavy pressure.
Hawkish vs. dovish: The BoC's hawkishness stands in stark contrast to the Fed's perceived dovishness, widening the interest rate gap and favoring the CAD.
Overall, a potent cocktail of higher oil prices, hawkish BoC, and fading hopes for a strong USD is propelling the CAD to new heights. Buckle up, the Loonie's ride seems far from over!
