The Canadian dollar is currently under significant pressure, with recent economic conditions and rate changes contributing to its weakened position against the U.S. dollar.
The Canadian dollar continued its slide overnight but has shown a slight rebound in early New York trading. Much of the currency’s recent weakness stems from U.S. President Donald Trump’s “America First” policy agenda, which includes a broad 10% tariff increase.
However, the Canadian dollar is also facing domestic challenges. The Financial Post points out that Canada’s economic performance has lagged behind the U.S. and other major economies, a trend that reportedly began under the Trudeau administration.
Another immediate factor is the widening interest rate differential between Canada and the U.S., now standing at 115 basis points in favor of the U.S. Federal Reserve Chair Jerome Powell’s recent remarks suggest this gap may persist, as he indicated there’s no urgency to lower U.S. rates, given stable economic signals.
Today, traders will be closely watching U.S. economic data releases, including Retail Sales, expected to slow to 0.3% from 0.4% month-over-month in September, alongside Industrial Production and Capacity Utilization reports. Canada, meanwhile, will publish Manufacturing and Wholesale Sales figures.
EUR/USD traded within a narrow band of 1.0524-1.0581, briefly reaching the upper end in New York trading. This gain was largely due to profit-taking and an unwinding of oversold positions, though the upside remained limited, with eurozone economic data having minimal impact.
GBP/USD rose modestly from 1.2649 to 1.26697, despite weaker-than-expected economic data, including a 0.1% quarterly growth in Q3 GDP, falling short of the 0.2% forecast. Industrial and Manufacturing Production numbers also disappointed. Bank of England Governor Andrew Bailey’s remarks on improving EU relations stirred speculation of a “Brenter” approach.
USD/JPY dropped from 156.75 to 155.22 before rebounding to 155.55 during New York trading. Japan’s stronger-than-expected Q3 GDP (0.9% year-on-year versus a 0.7% forecast) initially drove the yen higher. The decline deepened following Finance Minister Kato’s comments, sparking pre-weekend profit-taking.
AUD/USD moved up slightly within a 0.6445-0.6480 range, bolstered by mixed economic data from China and a mild easing in the US dollar’s strength.
