Canadian Dollar Weakens on US Dollar Safe Heaven Demand
The Canadian dollar weakened past 1.40 per USD, retreating from the two-month high of 1.39 reached on November 4th, as the US dollar gained on safe-haven demand following a sharp selloff in US equities. The Democrats won majorities in both chambers of the US Congress in the midterm elections, fueling concerns over tighter AI infrastructure regulations. Markets are also cautious ahead of employment reports from Canada and the US. Canadian employment is expected to rise by 13.6 thousand in October, following a 68.3 thousand decline in September, which was the steepest drop in seven months and well below expectations for a 7 thousand increase. The data may offer clues on the BoC’s policy outlook. At its latest meeting, the BoC raised rates by 25 bps to 2.5%, its first hike since 2023, as expected. Policymakers also raised their inflation and growth forecasts. Annual inflation reached 3.1% in September, its highest since May’s 3.2%, but below the 3.2% forecast.
The Canadian dollar weakened past 1.40 per USD, retreating from the two-month high of 1.39 reached on November 4th, as the US dollar gained on safe-haven demand following a sharp selloff in US equities. The Democrats won majorities in both chambers of the US Congress in the midterm elections, fueling concerns over tighter AI infrastructure regulations. Markets are also cautious ahead of employment reports from Canada and the US. Canadian employment is expected to rise by 13.6 thousand in October, following a 68.3 thousand decline in September, which was the steepest drop in seven months and well below expectations for a 7 thousand increase.
The data may offer clues on the BoC’s policy outlook. At its latest meeting, the BoC raised rates by 25 bps to 2.5%, its first hike since 2023, as expected. Policymakers also raised their inflation and growth forecasts. Annual inflation reached 3.1% in September, its highest since May’s 3.2%, but below the 3.2% forecast.