The Canadian dollar held steady against the US Dollar, as market participants digested key trade developments and domestic economic releases.
A surge in building permits by 11%, reaching a total of CAD 13 billion, was primarily driven by the residential sector, particularly in Ontario and British Columbia. However, the non-residential sector contracted by 5.9%, potentially reflecting economic uncertainties in specific sectors.
For the full year 2024, the total value of permits increased by 7.8% in nominal terms, reaching CAD 145.3 billion, marking the highest level since 2017. When adjusted for inflation, growth was a more moderate 3.7%, suggesting tempered optimism for the Canadian economy.
At the same time, the US Federal Reserve Chairman Jerome Powell adopted a cautious approach to US future monetary policy during his first day of testimony. He pointed to resilient economic growth and a strong labor market as reasons to hold rates steady. This contrasts with the recent decision of the Bank of Canada to cut rates, creating a potentially challenging outlook for the Canadian dollar.
Adding to the uncertainty, tomorrow’s US inflation figures will also play a pivotal role in shaping market sentiment. Although core inflation is expected to contract to 3.1%, it remains above the 2% target. Should the report confirm inflationary pressures, Powell’s cautious stance could be reinforced. Conversely, softer data should benefit the Loonie.
Meanwhile, escalating trade tensions are impacting sentiment. This confluence of domestic resilience and global tensions will play a pivotal role in determining the near-term trajectory of the Canadian dollar.
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