Canadian dollar steadies as investors weigh peak rate outlook

The Canadian dollar CADUSD was little changed against the greenback on Monday, holding near a multi-week low, as investors awaited possible clues on the Bank of Canada policy outlook and then a Federal Reserve interest rate decision later this week.

The BoC has said it will study the most recent economic data to gauge whether to raise its benchmark rate further after lifting it last Wednesday to 4.25%, the highest in nearly 15 years.

Money markets see a roughly 40% chance that the central bank would hike by 25 basis points at its next policy decision on Jan. 25.

Governor Tiff Macklem’s prepared remarks are due for release at 3:25 p.m. ET (2025 GMT).

“The market wants to ascertain have we hit peak rates,” said Amo Sahota, director at Klarity FX in San Francisco.

“Whether the markets have enough juice in them to make a directional play this side of the U.S. CPI number and the FOMC then on Wednesday would be interesting.”

U.S. consumer price data for November lands on Tuesday, while the Federal Reserve on Wednesday is widely expected to deliver a rate hike of 50 basis points.

The Canadian dollar was nearly unchanged at 1.3655 to the greenback, or 73.23 U.S. cents, after moving in a range of 1.3633 to 1.3683. Last Wednesday, the currency touched its weakest in nearly five weeks at 1.3699.

Speculators have raised their bearish bets on the Canadian dollar to the highest in eight weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The price of oil, one of Canada’s major exports, settled 3% higher at $73.17 a barrel, clawing back some recent declines.

Canadian government bond yields rose across the curve, tracking the move in U.S. Treasuries. The 10-year was up 3.2 basis points at 2.914.

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