The USD/CAD pair has shown resilience despite broader expectations of a potential shift in Federal Reserve policy next year. Market analysts suggest that the battered Canadian dollar is unlikely to find relief even if the Fed pivots to rate cuts, as other factors weigh heavily on its outlook.
Source – FXStreet
Weakness in the Loonie stems from Canada’s softer economic performance relative to the U.S. and the persistent strength of oil prices, which have failed to lend the expected support. As inflationary pressures ease and growth slows, the Bank of Canada appears unlikely to tighten policy further, limiting upside for the currency. Conversely, the U.S. dollar maintains its dominance, driven by economic resilience and persistent global demand for safe-haven assets.
While expectations of a Fed rate cut could pressure the greenback, the divergence in economic momentum between Canada and the U.S. may sustain the USD/CAD’s upward trend. The Loonie’s challenges highlight the broader struggles of commodity-linked currencies in a shifting macroeconomic landscape.
