The current market bias for USD to CAD is bearish. The primary drivers include the interest rate differential, as the Federal Reserve is expected to cut rates in the coming years, while the Bank of Canada maintains its rates. Recent U.S. inflation data showed a significant drop, which has fueled expectations for further easing from the Fed. For the Canadian dollar, a stronger job market is supporting its value, with the unemployment rate dropping recently, indicating growth momentum. Additionally, oil prices, critical to the CAD, are currently in a volatile phase but trending lower than their recent average, which could impact Canadian exports.
Near-term expectations suggest the USD/CAD could trade in a narrower range, reflecting its recent stability. Upside risks could stem from a rebound in oil prices, potentially boosting the CAD. Conversely, a surprise increase in U.S. consumer confidence could support the USD, challenging the current bearish trend. As the situation evolves, both domestic policy moves and global economic conditions will remain key watchpoints for businesses and travelers alike.
