The USD to CAD exchange rate has recently been influenced by a combination of economic factors affecting both currencies. Analysts note that the US dollar (USD) is currently facing pressure due to a dovish shift in Federal Reserve interest rate expectations, with the likelihood of a rate cut in December rising to 75%. The recent optimism surrounding peace efforts in Ukraine has further contributed to a softer demand for the USD. Upcoming US retail sales figures are anticipated to provide additional insights, potentially leading to a decrease in demand if sales growth in September shows signs of slowing.
Conversely, the Canadian dollar (CAD) remains subdued, largely due to declining oil prices. Since Canada is a significant oil exporter, the CAD typically reacts to fluctuations in oil prices. Currently, oil prices are around $63.37, which is approximately 3.0% below their three-month average. Continued decreases in oil prices may keep the CAD on weaker footing, especially as the Bank of Canada has recently lowered interest rates to 2.25% amid economic uncertainties.
Furthermore, the recent USD to CAD price data indicates the exchange rate is near 90-day highs at approximately 1.4117, about 1.2% above the three-month average of 1.3948. The rate has shown stability within a 2.8% range from 1.3738 to 1.4117 over the past few months. Meanwhille, volatility in the oil market has been evident, with prices having traded within a significant 15.0% range from a low of $60.96 to a high of $70.13.
As the markets look ahead, the interplay between oil prices, Federal Reserve policy, and Canadian economic indicators will be crucial in shaping the future trajectory of the USD/CAD exchange rate. Investors and businesses should remain vigilant to these evolving dynamics as they plan for international transactions and investments.
