Photo by Michelle Spollen on Unsplash

The Canadian Dollar (CAD) stumbled into a second straight day of declines on Thursday. The US Dollar (USD) continues to gain ground despite a fresh interest rate cut from the Federal Reserve (Fed), as market tensions surrounding shaky US economic conditions and still-high Treasury yields keep the safe-haven Greenback well-bid.

The Bank of Canada (BoC) delivered its own quarter-point interest rate cut this week, kicking out what little support the Loonie had against the US Dollar. Rate markets are now sceptical about the BoC’s ability to deliver further economy-supporting rate trims looking forward, with the Canadian economy grappling with flagging data releases and recession concerns buoyed into the high end.

Daily digest market movers: Canadian Dollar falls back as central banks race rate cuts

• The Canadian Dollar fell around one-sixth of one percent against the US Dollar on Thursday.
• The Loonie’s two-day decline has extended to 0.6% top-to-bottom.
• Despite near-term declines, the Canadian Dollar is still trading within a comfortable range against the US Dollar.
• The BoC and the Fed both delivered quarter-point rate cuts this week, and it now comes down to which CB will deliver further rate cuts through the remainder of the year.
• General market sentiment adds complexity to the rate differential. Greenback flows remain elevated despite Fed rate cuts, as Treasury yields remain high. Ongoing weakness in US economic data could see the US Dollar climb further despite rate cuts as risk aversion returns to markets.

Canadian Dollar price forecast

The Canadian Dollar has eased back against the US Dollar heading through the midweek, sending USD/CAD higher after a third straight bounce from a technical support zone near 1.3740. The pair is now back into a congestion point at the 50-day Exponential Moving Average (EMA) near 1.3790, and near-term price action is struggling to find meaningful momentum on either side of the 1.3800 handle.

USD/CAD daily chart

(Click on image to enlarge)

More By This Author: