Canadian Dollar Dynamics: Economic Insights and Monetary Policy Updates
Solid ECN – The Canadian dollar is currently valued at around 1.35 per USD, returning from a one-month peak of 1.345 USD recorded on March 7. This drop is primarily due to the stability and strength of the US dollar. Meanwhile, the Federal Reserve is expected to hold interest rates steady at its upcoming March 19-20 meeting, with predictions leaning towards a rate cut in June. This decision comes after the consumer price index indicated a slight increase beyond expectations. Specifically, the overall inflation rate went up to 3.2%, surpassing forecasts, while the core inflation rate decreased slightly to 3.8% from 3.9%, still over the expected 3.7%.
In February, the unemployment rate in Canada increased to 5.8%, aligning with analysts' predictions. The country also witnessed an addition of 42,000 jobs, exceeding the anticipated numbers and showcasing a solid job market. Consequently, this strength allows the Bank of Canada to keep its monetary policy tight, helping curb further drops in the value of the Canadian dollar, also known as the loonie.