USDCAD continues to fallamid declining oil prices

Key Movers

Demand for the US dollar declined to a four-month low and declined 1.2% yesterday following comments from the Federal Reserve. The US Dollar Index (DXY) stayed in negative territory this morning, hovering around a four-month low. The weakening of the greenback can be attributed to indications that the Fed is concluding its tightening cycle. Projections suggested a decrease in borrowing costs next year, and there was increasing speculation of a rate cut in March 2024. Chairman Jerome Powell decided to hold the interest rate at 5.25-5.5% range.

The euro maintained a positive stance, surpassing the 1.09 threshold, driven by the impact of the USD’s movements following the European Central Bank's (ECB) decision to keep interest rates steady at 4.5%. The bank cautioned that inflation is expected to rise in the coming months. Concurrently, economic projections indicated an acceleration in the region's economy, with an average growth rate of 0.6% in 2023, increasing to 0.8% in 2024, and further to 1.5% in 2025.

The GBP/USD pair rose after the Bank of England's (BoE) decision to hold rates at 5.25% for the third consecutive time. The pair reached its highest point since August, around 1.2755. The quick rise can be attributed to the BoE’s strong stance on policy. The BoE did hint that they might increase rates in the future if inflation continues to be a problem.