Skip to content USDCAD Fundamental Analysis – 2-October-2024
The Canadian dollar recently surpassed the 1.35 mark against the US dollar, making a strong recovery from its one-week low point of 1.352 on September 30th.
This improvement was fueled by positive economic indicators and a better outlook for foreign currencies, which helped mitigate the strength of the US dollar.
Notably, Canada’s manufacturing sector showed signs of growth, with the Purchasing Managers’ Index (PMI) climbing to 50.4 in September 2024 from 49.5 in August. This marks the first sign of growth in the sector since April 2023.
Economic Shifts and Global Influences
This economic upturn aligns with the Bank of Canada’s recent decision to start reducing interest rates, which reduces the necessity for further monetary easing.
In the global arena, escalating tensions in the Middle East have pushed oil prices higher, likely increasing the inflow of foreign currency through Canada’s significant oil exports.
Despite these factors promoting the Canadian dollar, the US dollar continued to find support as a safe haven, which somewhat limited the Canadian dollar’s gains.
Conclusion: Balancing Act in Currency Markets
In summary, the Canadian dollar has demonstrated resilience, benefiting from domestic economic improvements and favorable shifts in the global market.
While external pressures like US dollar demand continue to pose challenges, the overall economic data suggests a positive trajectory for Canada’s currency. This balance between internal growth and external challenges will be crucial in shaping the Canadian dollar’s path forward.
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