The Canadian Dollar (CAD) continued its weak stance on Friday. It moved back into recent lows and had a hard time finding gains. It even shed one-quarter of one percent against the US Dollar.
Entering a Lull
The Loonie is now in a lull period as there are hardly any economic data releases coming up in the near future. This means CAD traders are left dealing with the situation near multi-year lows.
After Holiday Impact
After the midweek market closure for Christmas, the market is still moving slowly as we head towards the New Year’s midweek holiday next Wednesday.
Daily Digest of Market Movers
CAD Near Multi-Year Lows
The Canadian Dollar keeps hovering close to 56-month lows. This has pushed the USD/CAD rate back above the 1.4400 handle.
Holiday Market Constraints
The holiday markets are slow and will continue like this into the new year for a while. Also, trading volumes will stay low for now.
Lack of Economic Data
There’s no Canadian economic data scheduled for release next week. And the New Year’s midweek market closure will make market flows even slower.
Policy Rate Divergence
The Bank of Canada (BoC) is expected to keep cutting rates, while the Federal Reserve (Fed) is likely to slow down the pace of cuts in 2025. This difference in policy rates is really hurting the Loonie.
Canadian Dollar Price Forecast
End of Christmas Trading Week
The Canadian Dollar ended the Christmas trading week on the low side. It fell against the US Dollar and pushed the USD/CAD into the high end of recent chart congestion. The pair is drifting higher as bids are well above the 50-day Exponential Moving Average (EMA) near 1.4100.
Outlook for December and Beyond
December is set to close with a big gain for USD/CAD, marking a fourth consecutive gain month as the Loonie struggles. Both those buying the US Dollar and those shorting the Canadian Dollar will aim for a long-term barrier near 1.4700. That’s where the pair would reach its highest bids in over 20 years. For now, though, the uptrend has to get past December’s peak of 1.4467.
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