Currency Market Update: October 30 Opening Rates
At the market open on October 30, the Euro was trading at an average of 1.62 Canadian dollars. This marked a fractional 0.06% change from the previous day’s close of 1.62, according to Dow Jones data, a movement that breaks a three-day market trend.
In parallel, the U.S. dollar opened at an average of 1.40 Canadian dollars. This represented a 0.31% increase from the prior session’s 1.39, putting an end to three consecutive sessions of a flat trend.
Volatility for both currencies over the past seven days has been notably lower than the accumulated data for the last year. This suggests that trading patterns are currently showing fewer significant alterations than the general trend might predict.
Economic Outlook: Bank of Canada Eyes 2% Inflation for 2025
Looking ahead, the Bank of Canada (BoC) estimates that inflation will remain within a range of around 2% for 2025. This outlook could encourage the central bank to maintain its trend of reducing interest rates.
According to Pierre Cléroux, Vice President of the Business Development Bank of Canada, rates could potentially be lowered to 2.75% by mid-2025 and possibly reach 2.5% by the end of the year.
This forecast follows the BoC’s 2024 policy shift away from more stringent economic measures, when it began reducing interest rates from their 5% peak. This strategy helped bring inflation under control and is expected to continue.
However, the election of Donald Trump for a second term as U.S. President has generated uncertainty in the region, particularly regarding the economic policies he plans to implement. For the coming period, domestic consumer spending and a rebound in housing investment are expected to form the foundation for Canada’s GDP expansion as interest rates gradually decline.
Background on Canada’s Currency
The Canadian dollar (CAD) is the official monetary unit in Canada and is subdivided into 100 cents. The currency has been used for nearly all of the country’s history, having replaced the British pound sterling, the Spanish dollar, and the peso.
On July 1, 1858, authorities ordered the minting of the first Canadian dollars, adopting a decimal system in the following years. Monetary unification of all Canadian provinces under the dollar was approved in 1871, and the gold standard was ultimately abolished in 1933.
Currently, Canadian coins (1, 5, 10, and 25 cents; 1 and 2 dollars) are issued by the Royal Canadian Mint. Banknotes (5, 10, 20, 50, 100, and 1,000 dollars) are issued by the Bank of Canada and produced in Ottawa.
Canada’s Position in the Global Economy
The Organisation for Economic Co-operation and Development (OECD) recently confirmed that Canada has passed its economic turning point following the COVID-19 pandemic and is heading toward a period of moderate growth.
Furthermore, Canada established itself as the top trade partner of the United States by the end of 2021, accounting for a 14.5% share among the U.S.’s top 15 partners.
The International Monetary Fund (FMI) had previously projected 4.1% growth for Canada in 2022 and 2.8% in 2023, signalling a deceleration from the 4.7% growth achieved in 2021.
