{"id":18078,"date":"2024-01-26T13:49:00","date_gmt":"2024-01-26T10:49:00","guid":{"rendered":"https:\/\/roboforex.com/blog\/?p=18078"},"modified":"2024-08-19T16:32:25","modified_gmt":"2024-08-19T13:32:25","slug":"usd-cad-forecast","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2024\/01\/26\/usd-cad-forecast\/","title":{"rendered":"USD\/CAD: Analysis of the Current Trend and Expert Forecasts for 2024"},"content":{"rendered":"\n

USD\/CAD<\/a> is among the most sought-after currency pairs in international trade. On 25 January, we examined the key factors influencing the pair’s exchange rate, analysed the dynamics of price changes in 2023, conducted a technical analysis of its chart, and explored expert forecasts for 2024-2025.<\/p>\n\n\n\n

You can visit the RoboForex Market Analysis<\/a> webpage for the latest USD\/CAD forecasts<\/a>.<\/em><\/p>\n\n\n\n

<\/span><\/a>Overview of the USD\/CAD currency pair<\/span><\/h2>\n\n\n\n
USD\/CAD shows the ratio of the US dollar (USD) to the Canadian dollar (CAD). Its quotes indicate how many Canadian dollars must be paid for one US dollar. When the pair exchange rate rises, this means that the US dollar is strengthening against Canada’s currency. When the exchange rate drops, this signals<\/a> that the Canadian dollar is on the rise against the US dollar.<\/p>\n\n\n\n
<\/span><\/a>Trading characteristics of the USD\/CAD pair<\/span><\/h3>\n\n\n\n
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The currency pair<\/a> is traded around the clock from Monday to Friday, with significant trading volumes and maximum volatility<\/a> during the American trading session. During this period, the US and Canada release the most crucial economic statistics that have a significant impact on the pair's exchange rate<\/li>\n\n\n\n
USD\/CAD is quite volatile, characterised by average daily movements ranging from 800 to 1,000 pips. During periods of intense global market movements, the pair’s volatility may increase to 2,000-3,000 pips per day in the short term<\/li>\n\n\n\n
USD\/CAD is one of the major currency pairs, which is why the spread is small, thanks to its popularity and high liquidity. In a typical market environment, the spread ranges from 10 to 15 pips in popular ECN accounts<\/a><\/li>\n<\/ul>\n\n\n\n\n\n
<\/span>Key factors influencing the USD\/CAD quotes<\/span><\/h2>\n\n\n\n
<\/span><\/a>The Bank of Canada’s monetary policy<\/span><\/h3>\n\n\n\n
The Bank of Canada has actively combated mounting inflation<\/a> from March 2022 to July 2023 by tightening its monetary policy. It is worth noting that the interest rate was raised nine times over this period, with the last increase at a meeting in July 2023. Since then, the rate has remained at 5%. The interest rate<\/a> hikes have supported the Canadian dollar exchange rate. In its monetary policy, the Bank of Canada focuses on achieving the inflation target of 2%.<\/p>\n\n\n\n
The country’s CPI<\/a> decreased in the second half of 2023, falling from 8.4% in July 2023 to 3.4% in January 2024.<\/p>\n\n\n\n
In its reports<\/a>, the central bank highlights that higher interest rates help ease price pressures in the country, leading to reduced inflation. However, progress to the 2% target is slow. The regulator expects inflation will persist at 3.5% by mid-2024 and return to the 2% target in 2025.<\/p>\n\n\n\n
At its last meeting on 24 January 2024, the Bank of Canada kept the interest rate at 5%. Following the meeting, Tiff Macklem, the regulator’s governor, noted that the Governing Council reached a clear consensus on the size of the indicator, and it was necessary to allow higher rates time to take effect. As there are currently no signals of possible rate cuts, it can be presumed that the rate will likely remain unchanged in the first half of 2024.<\/p>\n\n\n\n
<\/span><\/a>The US Federal Reserve’s monetary policy<\/span><\/h3>\n\n\n\n
The US Federal Reserve also seeks to curb inflation by tightening monetary policies, with the inflation target at 2%. From the beginning of 2022 to July 2023, the interest rate has gradually risen from 0.25% to 5.5%. This has significantly impacted the US dollar’s exchange rates, which strengthened markedly against many world currencies during this period.<\/p>\n\n\n\n
The situation has now changed, with inflation gradually decreasing and high interest rates exerting pressure on the US economy. The country’s CPI was 3.4% in January. The regulator’s minutes<\/a> refer to slowing economic growth and a smooth decline in inflation, perceived by analysts as a signal of potential rate cuts in 2024. Experts anticipate that the Federal Reserve’s interest rate may be reduced at the March and May 2024 meetings. These expectations will exert pressure on the pair’s quotes.<\/p>\n\n\n\n
<\/span><\/a>Oil prices<\/span><\/h3>\n\n\n\n
The Canadian dollar exchange rate is influenced by various factors, including commodity prices, primarily oil prices. As a major exporter of natural resources, especially oil, Canada depends on demand for its products, with the US being their primary consumer. Due to the strong impact of oil prices on the exchange rate, CAD is considered a commodity currency.<\/p>\n\n\n\n
Representatives of this group usually experience a price decline when the investment environment worsens and demand for natural resources falls. Conversely, an increase in oil prices provides support for such currencies. Rising crude oil<\/a> prices help strengthen the Canadian dollar, leading to a decline in the USD\/CAD exchange rate. Conversely, a drop in oil prices pushes the currency pair up as Canada’s currency weakens.<\/p>\n\n\n\n
Brent<\/a> quotes hovered within a wide price range from 70 USD to 96 USD in 2023. The OPEC+ policy aimed at limiting oil production bolstered oil prices. If oil prices rise, securing a foothold above 80 USD could provide considerable support for the Canadian dollar exchange rate and trigger a decline in the USD\/CAD quotes. Conversely, a drop in oil prices below 70 USD will adversely affect the Canadian currency and may drive up the pair.<\/p>\n\n\n\n
<\/span><\/a>Economic development indicators of the US and Canada<\/span><\/h3>\n\n\n\n
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Interest rate decisions of the Bank of Canada and the US Federal Reserve<\/li>\n\n\n\n
Inflation reports<\/li>\n\n\n\n
Unemployment Rate<\/li>\n\n\n\n
Nonfarm Payrolls<\/a><\/li>\n\n\n\n
GDP<\/a> Growth Rates (GDP)<\/li>\n\n\n\n
Inflation Indices<\/a> (CPI, PPI<\/a>)<\/li>\n\n\n\n
Industrial Production (Industrial Production Index)<\/li>\n\n\n\n
Retail Sales<\/li>\n\n\n\n
Trade Balance<\/a><\/li>\n\n\n\n
Consumer Confidence Index<\/li>\n\n\n\n
ISM Manufacturing Purchasing Managers Index<\/li>\n\n\n\n
Global oil prices<\/li>\n<\/ul>\n\n\n\n
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<\/span>2023 USD\/CAD price market outlook<\/span><\/h2>\n\n\n\n
The pair showed mixed trends in 2023, starting the year at 1.3545. During the subsequent months, quotes ranged from 1.3100 to 1.3900. With no clear long-term trend observed during the year, the price underwent local movements within the above range.<\/p>\n\n\n\n
The decline in the quotes was attributed to the Bank of Canada’s rate hike policy and stable oil prices, which remained above 70 USD per barrel, supported by the OPEC+ restrictive policy. A growth driver for the pair’s exchange rate was the Federal Reserve’s interest rate hike policy and the strengthening of the US dollar against other currencies.<\/p>\n\n\n\n\n

<\/span><\/a>Economic development indicators of the US and Canada<\/span><\/h3>\n\n\n\n\nInterest rate decisions of the Bank of Canada and the US Federal Reserve<\/li>\n\n\n\nInflation reports<\/li>\n\n\n\nUnemployment Rate<\/li>\n\n\n\n