- The Canadian dollar weakened against major currencies as the new week began.
- Canada is sparsely represented on the economic calendar this week.
- Mid-level Canadian data leaves CAD at the mercy of key central bank announcements.
The Canadian Dollar (CAD) weakened on Monday, lagging a rebound in the Greenback as investors position themselves ahead of the Federal Reserve’s (Fed) next rate decision later in the week. The CAD is underrepresented on the economic calendar this week, and a large number of central bank appearances midweek will leave the Canadian Dollar at the mercy of broader market flows.
With a light economic agenda on the horizon, CAD traders will be keeping an eye on Wednesday’s Canadian Gross Domestic Product (GDP) for the month of May, which is expected to shrink to 0.1% MoM from 0.3% in April as Canada’s economy continues to slow. S&P Global Canadian Manufacturing Purchasing Managers’ Index (PMI) figures for June are scheduled for Thursday, which have been consistently in contraction territory below 50.0 since May 2023.
Daily Market Wrap: Canadian Dollar Yields to Central Bank Expectations
- The Canadian Dollar is on track to lose ground against the US Dollar for the ninth consecutive session, and has fallen against the Greenback in all but one of the last 13 consecutive trading sessions.
- After the Bank of Canada (BoC) delivered another quarter-point cut last week, CAD traders are immediately focused on the odds of another BoC rate cut in September, with the odds currently priced at roughly equal.
- The US Federal Reserve will be the market driver this week as markets clamor for a 25 basis point rate cut in the near future.
- The Fed is expected to hold rates this week, but traders will be looking for verbal clues from Fed Chair Jerome Powell about the September rate decision.
- According to the CME’s FedWatch tool, rate traders have fully priced in a 100% chance of at least a quarter-point cut when the Federal Open Market Committee meets on Sept. 18.
Canadian Dollar PRICE Today
The table below shows the exchange rate of the Canadian Dollar (CAD) against major currencies today. The Canadian Dollar was the strongest currency against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.15% | 0.18% | 0.18% | 0.16% | 0.37% | 0.29% | |
| EUR | -0.37% | -0.26% | -0.18% | -0.17% | -0.17% | -0.02% | -0.06% | |
| GBP | -0.15% | 0.26% | 0.04% | 0.05% | 0.09% | 0.25% | 0.19% | |
| JPY | -0.18% | 0.18% | -0.04% | -0.03% | 0.00% | 0.19% | 0.14% | |
| CAD | -0.18% | 0.17% | -0.05% | 0.03% | 0.02% | 0.17% | 0.13% | |
| AUD | -0.16% | 0.17% | -0.09% | -0.00% | -0.02% | 0.18% | 0.10% | |
| NZD | -0.37% | 0.02% | -0.25% | -0.19% | -0.17% | -0.18% | -0.06% | |
| CHF | -0.29% | 0.06% | -0.19% | -0.14% | -0.13% | -0.10% | 0.06% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the chart will represent the CAD (base)/USD (quote).
Technical Analysis: Another day, another green candle for USD/CAD
The Canadian Dollar (CAD) was a mixed performer on Monday as traders look elsewhere for inspiration. The CAD retreated roughly a fifth of a percent against the Greenback, while it fell a third of a percent against the recovering Japanese Yen. Gains remain slim, with the CAD up a scant sixth of a percent against the Euro and New Zealand Dollar.
The USD/CAD continues to climb higher on the charts, marking a ninth consecutive gain as the Canadian dollar slides against the greenback. The pair is up 2% since hitting a short-term low of 1.3589, sparking a rally after a technical rejection from the 200-day exponential moving average (EMA).
USD/CAD daily chart
Canadian Dollar FAQs
The key factors determining the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of oil, Canada’s main export, the health of its economy, inflation and the trade balance, which is the difference between the value of Canadian exports and its imports. Other factors include market sentiment, i.e. whether investors are betting on riskier assets (risk-on) or looking for safe assets (risk-off), with risk-on being positive for the CAD. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian dollar.
The Bank of Canada (BoC) exerts significant influence over the Canadian dollar by setting the level of interest rates that banks can lend to each other. This influences the level of interest rates for everyone. The BoC’s main objective is to keep inflation between 1% and 3% by adjusting interest rates up or down. Relatively high interest rates are generally positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former being negative for the CAD and the latter being positive for the CAD.
The price of oil is a key factor influencing the value of the Canadian dollar. Oil is Canada’s largest export, so the price of oil tends to have an immediate impact on the value of the CAD. Generally, if the price of oil rises, the CAD rises as well, as aggregate demand for the currency increases. The opposite occurs if the price of oil falls. Higher oil prices also tend to lead to a higher probability of a positive trade balance, which also supports the CAD.
Although inflation has traditionally always been considered a negative factor for a currency, as it reduces the value of money, the opposite has actually occurred in modern times, with the relaxation of cross-border capital controls. Higher inflation typically leads central banks to raise interest rates, which attracts more capital inflows from global investors looking for a lucrative place to store their money. This increases demand for the local currency, which in Canada’s case is the Canadian dollar.
The released macroeconomic data measures the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment, but it can encourage the Bank of Canada to raise interest rates, which translates into a stronger currency. However, if the economic data is weak, the CAD is likely to fall.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
