The Canadian Dollar (CAD) faced challenges as it briefly hit a 14-week low against the Greenback following the Bank of Canada’s (BoC) decision to cut rates by 25 basis points. The BoC also revised its growth forecasts lower, leading to downward pressure on the CAD. Meanwhile, mixed US PMI figures added to the uncertainty in the market.
Canada’s rate cut was in line with expectations, but the sharp downward revisions to growth forecasts for 2024 dampened investor sentiment. On the US side, Manufacturing PMI contracted while Services PMI expanded unexpectedly, setting the stage for a volatile week ahead with key US economic data releases.
Key Highlights:
- The BoC cut rates as expected to 4.5%.
- Growth forecasts for 2024 were revised lower to 1.2% from 1.5%.
- First-quarter growth forecast was slashed to 1.7% from 2.8%.
- US PMIs showed mixed results, with Manufacturing contracting and Services expanding.
Analysis:
The BoC’s rate cut and growth forecast revisions have put pressure on the Canadian Dollar, while mixed US PMI figures have added to market uncertainty. Investors should closely monitor upcoming US economic data releases for further insights into the direction of the USD/CAD pair. Overall, the outlook for the Canadian Dollar remains uncertain, with factors such as interest rates, oil prices, inflation, and economic data releases influencing its value. Stay informed and be prepared for potential fluctuations in the currency market.