Canadian Dollar lurches higher on easing market tensions

• The Canadian Dollar traded nearly 1.5% higher at its peak on Monday.
• Canada’s latest BoC outlook reveals nothing particularly noteworthy.
• The Loonie is benefiting from a broad-market easing in the Greenback.

The Canadian Dollar (CAD) caught a rare boost on Monday, dragging USD/CAD back below 1.4400 as investors across the globe find some risk appetite after incoming US President Donald Trump made a last-minute swerve to avoid day-one tariffs via executive order.

The Bank of Canada’s (BoC) latest Business Outlook Survey revealed few surprises, with overall economic sentiment remaining subdued. However, the BoC did note that the overall depth of bearish sentiment appears to be shallowing, with slightly fewer businesses and consumers expecting a recession in the next year.

Daily digest market movers: Canadian Dollar gets a bid as Greenback softens on upbeat market sentiment

• The Canadian Dollar bounced after tapping a fresh 5-year low against the US Dollar.
• Markets opened up the spigots after it was announced that newly-minted US President Donald Trump would not be imposing sweeping day-one tariffs of at least 20% on all of the US’ major trading partners at the same time.
• According to the BoC, only 46.5% of consumers in Q4 expect a recession in the next 12 months, down from Q3’s 49%. 15% of Canadian businesses also expect a recession in the next year, down slightly from 16%.
• Despite the overall easing in recession concerns, Canadian hiring expectations remain soft, and most firms expect someone else to pick up the tab for the forecast increases in consumer spending.
• Canadian firms remain uncertain about the economy’s future in the face of the incoming Trump administration, who have a track record littered with bizarre economic claims and equally-bizarre trade policies.

Canadian Dollar price forecast

The Canadian Dollar (CAD) found a much-needed bid on Monday, even if it was sparked entirely by outside sources. Markets flows reversed direction out of the US Dollar to kick off the new trading week, sending USD/CAD down back below the 1.4400 handle and inching price action back toward the 50-day Exponential Moving Average (EMA) near 1.4230.

The pair has been trading in a rough range between 1.4400 and 1.4300 since rising into a multi-year high back in December. Loonie traders are looking for reasons to buy after a long, one-sided grind that saw the CAD shed nearly 8% top-to-bottom over a four-month period. However, technical oscillators are beginning to ease out of overbought territory, and a notable lack of progress in building the Canadian Dollar back up against the Greenback could send USD/CAD spiraling into fresh highs.

USD/CAD daily chart