Canadian Dollar Surges On Fed Rate Cut Expectations -

Canadian Dollar Surges On Fed Rate Cut Expectations

Aug 23, 2024Jeremy ParkinsonFinance0

The Canadian Dollar surged 0.80% against the Greenback on Friday.

Canada saw an unexpected improvement in core Retail Sales.

Fed officials give a nod to a rate cutting cycle, sparking a fresh risk bid.

The Canadian Dollar (CAD) is mixed on Friday, but found a surge of fresh bidding against the US Dollar on the back of fresh nods to rate cuts from the Federal Reserve (Fed) sent the Greenback into the floor. The CAD is up over eight-tenths of one percent against the USD, and on pace to see its single-best day against the Greenback since mid-2023.Canada reported a better-than-expected upswing in core Retail Sales in June, but headline Retail Sales contracted as-expected over the same period, keeping CAD bidding suppressed. Canadian economic figures remain thin next week, until next Friday’s update print in Canadian Q2 Gross Domestic Product (GDP).

Daily digest market movers

The Canadian Dollar is up over 0.8% against a slumping US Dollar on Friday.

Federal Reserve (Fed) officials finally opened the door to a rate-cutting cycle.

Fed policymakers opened the floodgates with Fed Chairman Jerome Powell giving the nod to a September rate cut while speaking at the Jackson Hole Economic Symposium.

Markets are fully geared for a September rate cut.

At the current cut, Markets are betting on one-in-three odds of a double cut for 50 bps on September 18, with the rest of the board still expecting a quarter-point trim.

Canadian Dollar price forecast
The Canadian Dollar (CAD) surged to multi-month highs against the US Dollar on Friday, climbing over 0.8% and tapping the 1.3500 handle for the first time since early April. The CAD is on pace to close higher against the US Dollar for a third straight week, and is up around 3.3% in a recovery from August’s lows against the Greenback.The US Dollar’s broad-market softening has sent the USD/CAD chart into a plunge that is picking up speed, extending below the 200-day Exponential Moving Average (EMA) near 1.3632. Shortsellers of the pair are firmly in control, but near-term exhaustion could be on the cards as price action rediscovers early 2024’s technical congestion zone.

USD/CAD daily chart
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