If the FED cut interest rates before the Bank of Canada, the Greenback may gain significant strength

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3200-1.3300

Euro                1.4600-1.4700

Sterling           1.6800-1.6900

WTI Oil (opening level) $72.04

As we close out 2023 the most important impact on the market during the year was when the world's Central Banks were going to stop increasing interest rates to bring inflation under control, as a result of the interest rate hikes the US Dollar went on a great run at the expense of many other Western currencies. As we head into 2024 the biggest theme will be when will the US Federal Reserve start to cut interest rates and what effect will those cuts have on the US Dollar and the world's stock markets. For the immediate future I think we will see both the stock market and the Dollar trade in uninspiring patterns until we hear from the Fed and then the market will give the Dollar some direction.

On the Geopolitical front the biggest threats to the markets seem to be a widening of the Middle East conflict to include the US and Iran, the war in Ukraine will drag on and any further alliances between Russia and China will worry markets and finally the US Presidential election which will undoubtedly cause havoc with the US landscape, a Trump victory will cause markets to become very nervous and fall back as his revenge plays out.

With the Canadian economy basically in recession to start 2024 the only real hope for the Canadian Dollar to garner any significant strength is for the US Dollar to remain weak and for the US Fed to cut interest rates before the Bank of Canada does. Anything below the 1.3000 (0.7692) level during the year would be big win for the Loonie.