Canadian Dollar Update – Canadian dollar ticking lower

• US CPI data ahead
• Bank of England cuts rates in 5-4 decision
• US dollar opens mixed after quiet overnight session

USDCAD open: 1.3779, overnight range 1.3768-1.3789, close 1.3787, WTI 55.84, Gold 4325.32

The Canadian dollar is lost and looking for direction as it bounces between support and resistance levels. FX markets have wound down for the holidays and domestic economic data has taken a back seat to US numbers and what they mean for future Fed decisions.

WTI oil prices are choppy in a 55.74-56.85 range due to shifting geopolitical tensions and Opec’s earlier decision to boost production. The cartel may be leaving existing quotas unchanged for Q 1 2026, but the damage has been done.

Weekly jobless claims, the Philadelphia Fed Manufacturing Survey, and the Consumer Price Index are all due this morning and may generate a brief burst of activity when the data hits the screens, but any reaction is likely to fade quickly. The FOMC decision is behind us and markets are effectively marking time as traders wind down ahead of the Christmas holidays.

Asian equity markets finished broadly flat, with Japan’s Topix down 0.37% ahead of tomorrow’s Bank of Japan meeting, while Australia’s ASX 200 and Hong Kong’s Hang Seng ended little changed.

As of 7:40 am,  the UK FTSE 100 is flat, while France’s CAC 40 is up .015% and the German DAX has gained 0.28%.  S&P 500 futures are up 0.40%, the US Dollar Index is 98.52, and  the US 10-year Treasury yield sits at 4.142%.

EURUSD traded in a 1.1717–1.1750 range as markets stayed sidelined ahead of the ECB policy decision today. No change in interest rates is expected, leaving the focus on updated forecasts, with some analysts anticipating a downgrade to the 2026 CPI projection from 1.7%.

GBPUSD moved within a 1.3341–1.3382 range ahead of the Bank of England decision before jumping to 1.3394 from 1.3354 after the BoE delivered a 25 bp rate cut to 3.75%. The vote split was 5–4, with four policymakers preferring to leave rates unchanged.

USDJPY traded near the top of its 155.48–155.98 range, supported by broad US dollar strength. The Bank of Japan is expected to hike rates to 0.75% tomorrow, though policymakers continue to grapple with a softer-than-expected economy after Q3 GDP rose just 0.6% q/q, raising concerns that tighter policy could add further strain.

AUDUSD drifted in a 0.6593–0.6613 range, rebounding from the session low after consumer inflation expectations rose 0.2% to 4.7% from 4.5% in November. The move was largely anticipated after the Australian government raised its inflation outlook earlier in the week.