Canadian Dollar waffles back into familiar midrange as Loonie bids sputter

• The Canadian Dollar stumbled again on Wednesday, hung out to dry near 1.4400.
• Economic data from Canada remains thin and the BoC is poised for another rate cut.
• The Fed has hunkered down ahead of its own rate call next week.

The Canadian Dollar (CAD) fell flat on Wednesday, churning back into familiar midrange levels with USD/CAD stuck in the mud near the 1.4400 handle. Data prints on both sides of the 49th parallel are limited through the midweek market sessions, leaving both Loonie and Greenback traders to wait for the next round of central bank action on interest rates for next week.

Both the Bank of Canada (BoC) and the Federal Reserve (Fed) will be making rate statements next week, but the outcomes are set to diverge firmly. The BoC is barreling toward yet another quarter-point rate trim to wrap up this month, while the Fed is broadly expected to stand pat on rates for the first half of 2025. Canadian Retail Sales figures are due on Thursday, but the long-dated numbers from November are unlikely to spark much volatility. US Purchasing Managers Index (PMI) survey results are slated for Friday, but not much is expected from those, either.

Daily digest market movers: Canadian Dollar treads water as markets await signals

• BoC is overwhelmingly expected to deliver another 25 bps rate trim next week.
• The Fed is expected to hold through most of H1, pushing the USD/CAD rate differential even wider.
• The Canadian Dollar shed another third of a percent against the Greenback, remains trapped in familiar congestion.
• CAD traders are keeping one eye out for anymore headlines from US President Donald Trump about possible trade tariffs on all Canadian goods being exported to the US.
• Canadian Retail Sales figures due on Thursday are unlikely to move the needle, unless figures deviate wildly from expectations.

Canadian Dollar price forecast

The Canadian Dollar is trapped in a consolidation phase against the US Dollar, driving USD/CAD in a slow circle around the 1.4400 handle. Midweek price action remains muted, and Wednesday's 0.35% shuffle only sees the Loonie further entrenched in a sideways grind.

Topside bidding action on USD/CAD continues to see the Canadian Dollar testing into multi-year lows, and technical indicators are beginning to break, drifting into the midrange as the pair goes nowhere and bearish momentum fumbles an opportunity to grab a pivot from overbought conditions.

USD/CAD daily chart