Canadian dollar gains some support from crude oil rally

The Canadian dollar is moderately gaining support from a crude oil rally. Markets are still tepid this week, with CAD traders waiting until Bank of Canada Governor Tiff Macklem’s appearance late Friday before finding tradeable headlines.

Markets are eagerly waiting the Federal Open Market Committee meeting to deliver their updated Interest Rate Outlook, known as the “Dot Plot”. With the Fed almost guaranteed to hold rates at 5.5% for their last rate decision of 2023, investors will be diving into the FOMC’s rate expectations and the Fed’s stance moving forward.

The Fed is expected to hold rates at 5.5% for the third consecutive meeting, marking its longest holding pattern since early 2022. Investors anticipate frequent rate cuts starting in Q1 2024, potentially ahead of the Fed’s achievable goal.

Markets are greatly affected by Fed rate announcements because Powell eliminated forward guidance last year. The price of a barrel of crude oil dropped to all-time lows, with WTI hitting $68. The Canadian Dollar gained tenth of a percent against the US dollar.