USD/CAD extends losses and nears 1.3300 with no sign of a trend change
- The US Dollar hits new mid-term lows approaching 1.3300.
- Sticky Canadian inflation supports the BoC’s hawkish view.
- The Dollar remains depressed with investors eyeing Fed cuts.
The Greenback keeps heading south against its Canadian counterpart on Wednesday reaching fresh multi-month lows below 1.3330. Hopes of Fed cuts on early 2024 and a stronger Loonie following Canadian CPI figures are crushing the USD.
CAD surges on higher oil prices and a hawkish BoC
Data released by Statistics Canada on Tuesday revealed that inflation remained sticky above the 3% yearly level in November, against market expectations of a decline to 2,9%. The Core Index accelerated to 2.8% year-on-year, from 2.7% in October.
These figures back the hawkish message conveyed by the Bank of Canada after its December meeting, denying any chance of rate cuts in the near term.
On the other hand, heightened hopes that the Fed will start cutting rates in March are acting as a headwind for a significant US Dollar recovery. Investors are turning a deaf ear to Fed officials’ warnings against excessive optimism.
Beyond that, Oil prices continue appreciating, driven by concerns about supply disruptions and higher costs with shipping firms forced to find alternative routes to the Suez Canal. This provides additional support to the loonie as Canada is one of the world´s major oil exporters.
Technical levels to watch