Don’t miss this month’s edition of the George Davis Report, where George discusses the earlier than expected Fed pivot and implications for the Canadian dollar in 2024.
What you need to know:
The much-awaited Fed pivot took place earlier than we expected, in December.
Now that the pivot has taken place, a major macroeconomic theme in 2024 will revolve around (1) the timing of the first rate cut and (2) how many cuts will take place this year.
The market has overshot RBC’s forecasts, which presents some risk of re-pricing taking place as the year progresses.
While this should lead to some bouts of USD/CAD strength, the topside may be more limited as USD sellers line up to take advantage of a lower interest rate environment.
A key risk will be a soft versus hard landing scenario, as the market is priced for the former.
For the trading range:
USD/CAD
Buyers
1.3100/1.3200
Sellers
1.3500/1.3600
