The Canadian dollar is showing signs of strength, attempting to recover after recent trading within a narrow range. This movement is influenced by several factors, including a mixed inflation report, fluctuations in the US dollar, and support from the oil market. Investors are closely watching economic data and geopolitical events for further direction.
- The Canadian dollar strengthened past 1.38 per US dollar.
- Headline inflation unexpectedly rose to 2.4% in December, exceeding expectations.
- The median core inflation rate eased to a one-year low of 2.5%, suggesting some moderation.
- The loonie is supported by steady oil export flows to the US and a tight North American crude balance.
- The US dollar weakened following renewed tariff threats from Washington.
- USD/CAD trades around 1.3835, close to a multi-day low.
- Investors are awaiting a speech from the US President.
The Canadian dollar’s value is subject to competing forces. While rising inflation and resilient demand might suggest a slower pace of interest rate cuts by the Bank of Canada, underlying price pressures are easing. The strength of the oil market provides support, but broader global economic tensions create uncertainty, influencing the US dollar and, consequently, the Canadian dollar’s trajectory. These factors combined highlight the complex environment in which the currency is currently trading.