The Canadian dollar recedes: How Diverging Policies and Oil Prices are Shaping CAD's Path Forward" The Canadian dollar has recently faced headwinds, impacted by both domestic and global factors. The currency has been softening against the U.S. dollar, primarily due to differing monetary policies between the Bank of Canada (BoC) and the U.S. Federal Reserve. The BoC's dovish stance—marked by caution amid a slowing economy—contrasts with the Fed’s hawkish tone, as the latter has kept rates elevated in response to resilient U.S. economic data. This divergence has widened the interest rate gap between Canada and the U.S., driving demand for the USD over the CAD. Additionally, the decline in global oil prices has hurt the commodity-sensitive CAD. While oil prices surged earlier in the year, they have since moderated due to weaker demand from major markets, including China. For Canada, which relies heavily on energy exports, this trend has weighed on the currency, with oil market volatility adding further uncertainty. Looking ahead, some analysts expect that the CAD could face additional downward pressure if the BoC moves toward rate cuts in early 2025 or if energy prices continue to lag. However, any significant rebound in oil prices or signs of economic slowdown in the U.S. could provide some support to the Canadian dollar as these factors play out. For now, the CAD's path remains complex, and investors are closely watching economic indicators from both Canada and global markets to navigate its near-term trajectory.