- The Canadian dollar beat the US dollar on Thursday.
- The US non -agricultural payroll (NFP) data (NFP) promoted the CAD on the USD.
- The feeling of the market in recovery keeps the US dollar under pressure and reinforces the CAD.
The Canadian dollar (CAD) received an additional impulse on Thursday, rising against the US dollar (USD) after the US non -agricultural payrolls (NFP) eliminated the fears of the market on a weakening of the US labor sector. The employment profits of ADP hinted in a possible contraction in the creation of general employment in June, but a suffocating increase in government hiring in the US at the state and local level obliterated a slower general pace of employment gains in other places.
The Canadian side of the economic calendar remains a limited issue, at least until the next lot of key Canadian inflation figures that will be published in the middle of the month. The latest decision of the Bank of Canada (BOC) is also scheduled for much later, at the end of the month. The CAD operators continue to revolve around the bets of whether or not there will be another rate cut by the BOC, and the probabilities are expected to fluctuate as the calendar progresses towards July 30.
Daily summary of market movements: the Canadian dollar gains ground after an optimistic NFP report.
- The net employment profits of the US NFPs shot in June, reaching 144K in seasonally adjusted terms, driven by a strong increase in hiring in education at state and local level.
- Despite the strong increase in hiring, analysts warn that it could be an isolated case; It is unlikely that governments maintain a strong hiring rhythm.
- Meanwhile, the side effects of tariffs are still affecting the ‘reality’ of the US economy: jobs in manufacturing, wholesalers and resource extraction all recorded falls.
- The optimistic employment report helped the market to dismiss this week’s fears of the labor sector after the preview of ADP jobs did not measure government hiring and exaggerate the possible falls in net employment.
- The Canadian version of Net General Employment Growth will be published next week on Friday, with the last minutes of the Federal Reserve (Fed) meeting scheduled for next Wednesday.
Prognosis of the price of the Canadian dollar
The Canadian dollar continues its upward march against the US dollar, leading to the USD/CAD torque even closer than minimum of several months below 1,3540. The daily profits of the CAD compared to the USD have been intermittent, but the continuous weakness of the US dollar, backed by the increase in the general feeling of the market, continues to send to USD/CAD down constantly.
The USD/CA has been in a constant drop since it reached maximum of several decades in early February. Daily candles are being pushed down by descending lines, and the pair continues to enter more in the bearish territory below the 50 -day exponential mobile average (EMA) about 1,3775.
USD/CAD DIARY GRAPH
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.
