- The EUR/CAD operates in a positive note around 1,5995 in the first bars of the European session on Friday.
- Trump threatened with 35% tariffs on Canadian products.
- Investors prepare for the June Canadian Employment Report, which will be published later on Friday.
The EUR/CAD crossing advances to 1,5995 during the first hours of European negotiation on Friday. The Canadian dollar weakens against the euro (EUR) after the US president Donald Trump announced new tariffs. Investors expect the publication of the June Canadian Employment Report, which will be released later on Friday.
On Thursday night, Trump said he will impose a 35% tariff on Canadian products from August 1. The announcement was accompanied by additional threats of general tariffs of 15% or 20% on most commercial partners. Canadian Prime Minister Mark Carney said that his government would continue to protect Canadian workers and companies while working towards the new deadline.
The June Employment Report in Canada will be at the Care Center later on Friday. The unemployment rate in Canada is expected to rise to 7.1% in June from 7.0% in May. In addition, investors predict that the economy will not add jobs in the same month, reversing the increase of May 8.8K. Any cooling signal in the Canadian labor market could favor additional feature cuts, pressing the CAD.
In the front of the euro, investors will closely monitor the developments around the commercial agreement between the EU and the USA Trump declared that EU members would receive letters by notifying them about the new tariff rates “in the next few days.” The uncertainty about Trump’s evolutionary commercial policy could undermine the EUR in front of the CAD in the short term.
Canadian dollar – frequent questions
The key factors that determine the contribution of the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BOC), the price of oil, the main export product of Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canadian exports and that of its imports. Other factors are market confidence, that is, if investors bet on riskier assets (Risk-on) or seek safe assets (Risk-Off), being the positive risk-on CAD. As its largest commercial partner, the health of the US economy is also a key factor that influences the Canadian dollar.
The Canada Bank (BOC) exerts a significant influence on the Canadian dollar by setting the level of interest rates that banks can provide with each other. This influences the level of interest rates for everyone. The main objective of the BOC is to maintain inflation between 1% and 3% by adjusting interest rates to the loss. Relatively high interest rates are usually positive for CAD. The Bank of Canada can also use quantitative relaxation and hardening to influence credit conditions, being the first refusal for CAD and the second positive for CAD.
The price of oil is a key factor that influences the value of the Canadian dollar. Oil is the largest export in Canada, 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 also rises, since the aggregate demand of the currency increases. The opposite occurs if the price of oil drops. The highest prices of oil also tend to give rise to a greater probability of a positive commercial balance, which also supports the CAD.
Although traditionally it has always been considered that inflation is a negative factor for a currency, since it reduces the value of money, the opposite has actually happened in modern times, with the relaxation of cross -border capital controls. Higher inflation usually leads to central banks to raise interest rates, which attracts more capital of world investors who are looking for a lucrative place to save their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
The published macroeconomic data measure 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 CAD direction. A strong economy is good for the Canadian dollar. Not only attracts 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.
