- The Canadian dollar seems to have finally exhausted its impulse.
- The key inflation figures of the Canadian CPI will be published this week, scheduled for Tuesday.
- Another decision of Boc rates also looms over the Loonie markets, scheduled for Wednesday.
The Canadian dollar (CAD) seems to have lost impulse, breaking a three -day streak and cutting some of its new profits against the US dollar (USD). The majority of the short -term profits of the Loonie against the US dollar have emerged from a general weakening of the market in USD flows, instead of any particular strength in the CAD itself.
The Bank of Canada (Boc) is ready to make another announcement about rates this week, and the markets wonder if the Boc will try to tighten a more rates cut before the tariffs begin to affect the economy. The Canadian Canadian Consumer Price Index (IPC) will also be published this week, will serve as a canary in the coal mine for what type of movements in interest rates could be considering the BOC.
Daily summary of the market movements: the Canadian dollar ends its upward streak while approaching the decision of the Boc
- The Canadian dollar cut recent profits against the US dollar, pushing the USD/Cad back to the level of 1,3900.
- The inflation of the Canadian CPI is expected to remain at 2.6% year -on -year on Tuesday.
- The latest decision of the BOC rates is scheduled for Wednesday.
- It is widely expected that the BOCs deliver 50 basic points in rates cuts for the end of the year.
- Canadian markets will shorten the week for Easter holidays on Friday.
Prognosis of the price of the Canadian dollar
The Canadian dollar took full advantage of a general weakening in the flows of the US dollar recently, rising 3.1% of minimum to maximum against the US dollar and pushing the USD/CAD torque at least six months below 1,3850. The impulse is freezing as the markets are oriented towards the publication of key data, leaving the USD/CAD Turn on the low side of the 200 -day exponential mobile (EMA) about 1,4070.
USD/CAD DAILY GRAPH
Canadian dollar faqs
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.
