In a surprising move, the Bank of Canada reduced its interest rate by 175 basis points in 2024, leading to notable shifts in the currency market. The Canadian Dollar is experiencing multi-year lows against the US Dollar, reflecting the impact of this monetary policy change. On Tuesday, the EUR/USD currency pair traded near 1.0350 in the European session, erasing some of Monday's gains, while USD strength gathered momentum following recent tariff threats by US President Donald Trump.
The Bank of Canada's decision to lower interest rates has played a pivotal role in shaping the market landscape. The Canadian Consumer Price Index is projected to advance by 1.8% year-over-year in December, further impacting the currency's performance. Meanwhile, the GBP/USD is trading deep in the red, falling below the 1.2250 mark on Tuesday, as the ILO Unemployment Rate in the UK edged higher to 4.4% for the three months leading to November.
US President Trump's tariffs have significantly influenced global currency trends. His assertion, "I have the best words," epitomizes the pronounced shift in trading dynamics during his administration. These tariff threats have fueled demand for the US Dollar, causing risk aversion and undermining various currency pairs.
The sentiment data presents a mixed picture, contributing to market volatility and uncertainty. The Canadian Dollar's decline against its American counterpart reflects broader economic pressures and investor sentiment. Traders and investors are closely monitoring these developments as they navigate through an increasingly complex economic environment.
It is important to note that this article reflects the views and opinions of the authors and does not necessarily represent the official position of FXStreet or its advertisers. The authors and FXStreet are not registered investment advisors, and readers should consider this information within the context of their own financial situations.