Canadian Dollar Comes Under Pressure from Falling Crude Prices

By Ketki Saxena

Investing.com – The Canadian Dollar started the day on the back foot against its US counterpart, as crude prices weighed on the commodity linked loonie.

In a day of up and down trading, the loonie faced pressure against most major currencies, but managed to more or less hold its against the US through the end of the trading day.

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The US dollar remained soft across the board as US Treasury yields declined and, ahead of key CPI data, as investors adjusted expectations for interest rate cuts from the US Federal Reserve.

Markets are now pricing in five Fed rate cuts in 2024, with a hold expected in January but cuts anticipated in March and May.

Looking ahead for the USDCAD pair, analysts at Scotiabank (TSX:BNS) note, “The weekly chart shows a bullish ‘hammer’ candle developed through the turn of the year."

“A high close for the USD last week – despite the hefty intraday swings in the USD Friday – adds emphasis to the bullish pattern of trade and supports the outlook for some additional, corrective gains in the USD in the next few weeks towards 1.34/1.35.:

“Gains through high/low resistance at 1.3390/1.3400 will add to near-term bullish momentum.”