The Bank of Canada has lowered its interest rate by 175 basis points in 2024, a significant move that is influencing the Canadian Dollar, which is currently navigating multi-year lows against the US Dollar. Meanwhile, the Canadian Consumer Price Index is projected to rise by 1.8% year-on-year in December. Across the Atlantic, the ILO Unemployment Rate in the United Kingdom has increased to 4.4% for the three months leading to November.
On the currency front, the GBP/USD pair is experiencing bearish pressure, trading below 1.2250 on Tuesday. This decline is largely attributed to risk aversion in the market. Similarly, the EUR/USD pair is trading negatively near 1.0350 during the European session, having erased some of its gains from Monday.
US President Trump's recent tariff threats are driving demand for the US Dollar, causing it to gather strength in the global market. This development has significantly impacted currency pairs, with the USD showing increased momentum against both the British Pound and the Euro.
The Canadian economy's adjustments and President Trump's tariff policies are shaping currency markets, reflecting broader economic trends and investor sentiment. The Bank of Canada's interest rate cut aims to stimulate economic activity, but it comes with implications for currency valuation against a stronger US Dollar.