Company: FXC
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027265
Chunk: 62

Company: Invesco CurrencyShares Canadian Dollar Trust
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1B
Chunk 62
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 and Q3 as crude oil was pressured at first by recession concerns, and then low refining margins decreasing crude demand, the bearish Trump trade, expectations for a supply glut in 2025, and the OPEC spare capacity overhang. Geopolitical risk premium also faded with no real supply disruptions playing out. However, the pair took the deepest plunge in the fourth quarter with the US dollar soaring on President Trump’s victory.  Many of his campaigned policies were expected to raise inflation risk, potentially leading to higher rates in 2025. In addition, tariffs generally weigh on foreign currencies, further boosting the USD.

The Canadian Dollar (CAD/USD) ended 2023 slightly higher. While the CAD did gain a bit in the first half of the first quarter, as the US dollar weakened further on expectations for a softer Fed stance, the pair fell sharply from mid-Feb to mid-Mar, with the dollar rebounding on signs of continued strength in the US labor market and inflation. Struggling commodity prices also capped the upside for the currency given the country is a major exporter of crude oil. However, the currency pair did rebound in the second half of March amid a weaker USD and the boost in energy prices. In the second quarter, while the pair was pretty range bound in April and May, the CAD really gained in June supported by the hawkish repricing of the BoC’s interest rate expectations while the US Fed paused. Despite its resilience, renewed dollar strength heavily pressured the pair in the third quarter, though the rebound in energy commodities limited the downside. In the fourth quarter, with the US dollar weakening on growing Fed rate cut expectations, the pair managed to recover significantly, reversing all earlier losses.

Additionally, the interest rate paid by the Depository has generally trended downward over the past year to thecurrent interest rate of 1.31%, as set forth in the FXC Rate Chart above. As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss. 

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor’s management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period covered by this report. 

In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies.