Everything You Need to Know on Tuesday: Bank of Canada Closely Monitors Economic Impact Post Half-Point Rate Reduction

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at1,491.40, up 0.18% from previous close

● Bank of Canada closely monitors economic impact post half-point rate reduction

● Economists predict further decline for Canada Dollar amid continuing downward trend

● Rogers Faces legal action over 'unlimited' data claims by Competition Bureau

● Vermilion Energy secures $1 Billion deal to acquire Westbrick Energy

● TD Bank announced redemption of $500 Million in Class A first preferred shares

Today, the Canadian dollar is trading at 69.37 US cents, a decrease from the previous close.

Bank of Canada's governing council anticipates that its second consecutive substantial interest rate reduction has helped it reach a pivotal point in combating inflation, while also closely monitoring the economy due to growth that is weaker than anticipated. The council's summary of discussions, leading up to the December 11 rate decrease which lowered the key interest rate by 0.5%, was published on Monday. Initially, members contemplated a more modest quarter-point cut, but decided to reduce the rate to 3.25% to align it more closely with the neutral rate, a level at which economic growth is neither decelerated nor accelerated.

The summary highlighted two key reasons for this decision: firstly, with inflation at 2% and the economy experiencing surplus supply, monetary policy no longer required a distinctly restrictive stance; secondly, the growth forecast for October was revised downward, necessitating stronger growth to absorb economic slack and maintain inflation near the 2% target.

Experts anticipate a challenging period ahead for the Canadian dollar, as it seems destined to prolong its downward trajectory. Karl Schamotta, chief market strategist at Corpay, stated, "We do have more room to fall". Recently, the Canadian dollar has been trading below 70 cents US, nearly four per cent less than its value in September.Schamotta forecasts that the upcoming months will be "a very turbulent period for Canada" due to uncertainties from the policy proposals of the incoming U.S. president, Donald Trump, which are expected to impact business investment and consumer confidence, leading to a weaker Canadian dollar in the short term. The robust performance of the U.S. economy, which is driving the U.S. yields higher compared to Canada, is drawing more investments to the U.S. This situation makes the Canadian dollar less attractive to global investors, contributing to its decline.

On Tuesday morning, crude oil prices experienced an uptick in anticipation of the Christmas holiday and an optimistic short-term market perspective. Brent crude increased by 0.7%, reaching $73.11 per barrel, while West Texas Intermediate crude also saw a 0.7% increase, trading at $69.71 per barrel. Analysts, as reported by Reuters, predict that benchmark prices will hover around these levels in the near term due to reduced activity in the paper markets and as market participants remain cautious, awaiting a clearer understanding of the global oil market balances for 2024 and 2025.