Canadian Dollar Update – Canadian dollar treading water

• BoJ expected to hike rates December 19
• Recent US data confirms Fed rate cut next week
• US dollar choppy but offered in quiet trading

USDCAD open: 1.3948, overnight range 1.3945-1.3975, close 1.3968, WTI 59.50, Gold 4200.94

The Canadian dollar is consolidating its recent gains as FX markets  continue to digest the implications of a Kevin Hassett–led Fed.  His interest-rate views are closely aligned with Trump, who wants rates at 1.05%. There is also a lack of top-tier data and it’s December, a combination known for sucking the life out of trading.

WTI oil prices are rangebound in a 58.99–59.42 band. The EIA reported a small increase in weekly crude stocks (actual 0.57 million barrels, forecast –1.9 million, previous 2.77 million).

Canada’s Ivey PMI data is due today.

It was another quiet overnight session and that tone is expected to carry through the New York session. Markets are still weighing what a Kevin Hassett–led Fed might look like and the broad view is that policy would tilt dovish. Incoming data is little more than momentary noise since traders are convinced that a 25 bp Fed rate cut next Wednesday is effectively locked in.

Yesterday’s ADP employment report showed a loss of 32,000 jobs, the weakest result in two and a half years, while the November ISM services reading of 52.6 compared to 52.4 in October underscored the economy’s resilience without altering expectations for easing.

Today’s US releases feature Challenger job cuts and weekly jobless claims.

As of 7:15 am, Europe is drifting higher with the German DAX up 0.73 percent, the French CAC-40 ahead by 0.39 percent, and the FTSE 100 rising 0.22 percent. S&P 500 futures are flat. The US Dollar Index is 98.79 and the US 10-year Treasury yield is 4.083%

EURUSD traded in a 1.1653-1.1682 range as the negative bias for the US dollar continues to support the single currency. Traders expect the Fed to cut rates while the ECB stands pat, giving the euro an added lift. The lack of movement in Russia–Ukraine talks is limiting gains, and ECB commentary, including remarks from President Lagarde, had no meaningful impact. The pair remains inside a ten-day uptrend channel bounded by 1.1610 and 1.1695.

GBPUSD traded in a 1.3327-1.3359 band and is holding on to its recent rally. Part of the support comes from a relief bid after the pessimistic forecasts surrounding Chancellor Rachel Reeves’ November 26 Autumn Budget failed to materialize. An upgraded OECD outlook that now sees UK growth at 1.2 percent in 2026 compared to its previous 1.0 percent estimate is also providing a modest tailwind.

USDJPY traded in a 154.73-155.54 range and slid sharply after Reuters reported that Japanese officials would tolerate a 0.25 percent BoJ rate hike at the December 19 meeting.

AUDUSD traded in a 0.6598-0.6620 range and is being supported by broad US dollar weakness and speculation that the RBA may lean more hawkish.