On Tuesday, Canada’s November International Merchandise Trade Balance reported lower figures month-over-month, and Canada’s Building Permits also fell more than expected in November. Combined with crumbling oil prices, these factors have clipped the loonie’s wings.
More broadly, there has been a significant shift back into the safety of the US dollar and US dollar-based assets, further pushing the Canadian dollar lower.
Despite the weak start to the year, the Canadian dollar is expected to trade around the 1.30 range by the end of 2024 and in the 1.34 range in the next three months, according to the latest Reuters survey. This survey, conducted in early January, involved foreign exchange analysts.
According to the survey, the Federal Reserve is expected to cut rates sooner and deeper than the Bank of Canada. This would allow the Canadian dollar to benefit from favorable interest rate differentials.
The Canadian dollar is currently trading at 1.3398 CAD against the US Dollar.
