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Canadian Dollar Gains as US Weakens Amid Shifting Monetary Policies

New Housing Price Index shows a tight Canadian housing market

February 25, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from David Eng, Investment Advisor, Harbourfront Wealth - Sonora Wealth Group.

Canadian Dollar Gains as US Weakens Amid Shifting Monetary Policies

"The Canadian dollar strengthened against a weakening US dollar, US initial jobless claims unexpectedly rose by 219,000, fueling speculation of a potential slowdown in the labour market. Although the FED's recent comments have mentioned a resilient labor market as a driver for keeping rates on hold, sustained increases in jobless claims could push policymakers toward a looser stance, further weighing on the US dollar and benefiting the Canadian currency.

Domestically, the New Housing Price Index (NHPI) for January showed a tight housing market, with new home prices continuing to fall by 0.1% on a monthly basis. Although nine metropolitan areas posted gains, the 0.4% decline in Toronto, the country's largest housing market, dragged the index down. Ottawa and Edmonton also posted declines, reflecting weaker new home sales. If these results point to an economic slowdown, it could introduce downside risks for the Canadian dollar.

Looking forward, geopolitical developments, including peace talks between Russia and Ukraine, could add a new layer of complexity and play a crucial role in shaping investor sentiment. If risk appetite improves, the Canadian dollar could extend its gains, while heightened uncertainty could limit its upside potential."

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