Ella 
In Asia on Monday, USD/CAD broke its three-day losing streak and traded around 1.3380. However, the Canadian dollar received a boost against the U.S. dollar (USD) following hawkish remarks from Bank of Canada (BOC) Governor McCallum on Friday. Macklem, speaking at the Canadian Club in Toronto, said the Bank of Canada will consider whether and when to lower policy rates once it is convinced the economy is clearly on a path toward restoring price stability.
Governor McColm clarified that it was too early to consider a rate cut, stressing that they would not necessarily have to wait for inflation to fully return to their 2% target before considering easing policy, but that inflation should be clearly heading towards develop in this direction. The Bank of Canada’s November core consumer price index data, which measures price fluctuations in a fixed basket of goods and services, will be released on Tuesday.
The U.S. dollar index attempted to hold steady after rebounding from a four-month low of 101.77 last Thursday. At press time, the U.S. dollar index was hovering above 102.50. Rising U.S. short-term Treasury yields provided support for the dollar. The 2-year Treasury yield rose to 4.48% on Friday but fell to 4.43% at press time on Monday. The 10-year Treasury yield is 3.92%.
Preliminary December PMI data was mixed, which could boost the dollar. The S&P Global Services Purchasing Managers Index rose to 51.3 from 50.8, indicating economic growth, while the Manufacturing Purchasing Managers Index fell from 49.4 to 48.2, indicating that the economy is contracting. Focus will now turn to Wednesday’s consumer confidence index and changes in existing home sales.
However, the dollar may come under pressure due to dovish comments from several Federal Reserve officials. Atlanta Fed President Raphael Bostic hinted on Friday that the Fed could cut interest rates in the third quarter of 2024 if inflation follows its expected trajectory. In addition, Chicago Fed President Austan Goolsbee did not rule out a rate cut at the Fed meeting next March.
