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• The Canadian Dollar tested back into recent lows and struggled to find gains.
• Canada’s economic data docket remains incredibly thin in the near term.
• Policy rate divergence is set to be the Loonie’s primary driver heading into 2025.

The Canadian Dollar (CAD) continued its soft stance on Friday, easing into familiar near-term lows and shedding one-quarter of one percent against the US Dollar. The Loonie is entering a lull period with functionally no releases on the data docket in the immediate future, leaving CAD traders to battle it out near multi-year lows.

Following the midweek market closure for the Christmas holiday, a soft-footed market footprint remains ahead of the New Year’s midweek holiday next Wednesday.

Daily digest market movers: Battered CAD holds near multi-year lows
 

• The Canadian Dollar continues to churn chart paper near 56-month lows, bolstering the USD/CAD rate back above the 1.4400 handle.
• Constrained holiday markets will bleed slowly into the new year, but volumes to remain crimped for the time being.
• Canadian economic data is entirely absent from the release schedule next week.
• The upcoming New Year’s midweek market closure will further hobble market flows.
• The Bank of Canada (BoC) is expected to continue easing rates, while the Federal Reserve (Fed) is poised to slowe the pace of cuts in 2025, widening the policy rate divergence currently pummeling the Loonie.

Canadian Dollar price forecast
 

The Canadian Dollar is back into the low side to wrap up the Christmas trading week, falling against the Greenback and pushing USD/CAD into the high end of recent chart congestion. The pair continues to drift higher as bids trade well north of the 50-day Exponential Moving Average (EMA) near 1.4100.

December is poised to close out deep in the green and will notch in a fourth consecutive gain month for USD/CAD as the Loonie crumples. Both Greenback bidders and Loonie shorts will target a long-term barrier near 1.4700, where the pair would be pushing into its highest bids in over 20 years. For now, the uptrend must overcome December’s peak of 1.4467.

USD/CAD daily chart

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