The Canadian dollar has weakened against the US dollar due to a combination of factors including weaker domestic growth signals, falling oil prices, and a stronger US dollar. Canadian economic momentum has slowed, with flat GDP in November and contractions in goods-producing industries. Meanwhile, external support has waned as oil prices have declined.
- The Canadian dollar weakened past 1.36 per US dollar.
- Canadian GDP was flat in November, with contractions in goods-producing industries.
- Manufacturing weakness underscores persistent excess supply and muted inflation pressure.
- Expectations are that the BoC can remain patient.
- Oil prices slid toward the low $60s per barrel.
- A firmer US dollar followed Kevin Warsh’s nomination as Federal Reserve chair.
- USD/CAD pair trades with mild losses near 1.3685.
- The US Dollar softens against the Canadian Dollar amid weaker-than-expected US economic data and a rise in crude oil prices.
Overall, the Canadian dollar’s performance is currently being weighed down by both internal and external factors. Slower domestic growth and weak manufacturing data suggest a need for caution from the Bank of Canada. Simultaneously, declining oil prices and a strengthening US dollar create further downward pressure. However, weaker US economic data and rising crude oil prices provide some support to the Canadian Dollar in the short term.