- The Canadian dollar received a very necessary impulse against the US dollar on Friday.
- The bearish flows of the Canadian dollar changed direction after the US dollar suffered a blow after the NFP.
- The US labor data in deterioration have hit the US dollar bluntly.
The Canadian dollar (CAD) was victorious after a disastrous report of non -agricultural payroll (NFP) of the USAs destroyed the global positioning in the US dollar (USD) on Friday. The dollar fell on all fronts after the net employment additions in the US were well below expectations, with the previous months facing strong downward reviews. The Canadian dollar has cut some losses against USD, but still remains in a strong fall for the week.
The positioning of the Canadian dollar is completely at the mercy of the US -based market positioning and the feeling of risk on Friday. The employment numbers in the US are being retroactively degraded as the US labor overview changes under the feet of investors. The Federal Reserve (FED) pointed out this week that it would need inflation data to remain stable and that the US labor market showed signs of weakness. The second of these two signs suddenly materialized on Friday, which caused a strong readjustment of the expectations of fed feature cuts.
Daily summary of market movements: the Canadian dollar benefits from the weakness of the dollar
- The Canadian dollar saw a disorderly graphic action on Friday before experiencing an increase against a hesitant US dollar.
- The USD/CA has been pushed again below 1,3800 after six consecutive days of USD profits.
- The US NFP figures reached under the expectations in July, sinking 73k compared to the expected 110k.
- The investor approach was in the strong downward reviews of the previous NFP reports, with May and June losing a accumulated total of 258k in main reviews as the hiring in the US is deteriorated.
- Despite obtaining his desire for the economic conditions that could trigger features of the Fed rates, President Donald Trump dismissed the head of the Labor Data Department of the Office of Labor Statistics after the fall of the NFP on Friday.
- According to the CME Fedwatch tool, rates operators have changed to 80% probabilities of a rate cut on September 17, an abrupt increase from 40-45% probabilities that were foreseen before the publication of the Friday Employment Report.
Prognosis of the price of the Canadian dollar
The USD/CAD was caught in a volatility trap on Friday, briefly trying territory above 1,3850 before taking a strong step down. The torque has ended a six -day streak streak for the US dollar, giving the Canadian dollar a very necessary respite of the bearish flows.
The dollar-loonie torque is now limited in no one land among the exponential mobile socks (EMA) of 200 days and 50 days, caught between key technical levels between 1,3900 and 1,3750.
USD/CAD DAILY GRAPH
Economic indicator
Non -agricultural payrolls
The most important result contained in the report on the employment situation is the monthly change in non -agricultural payrolls published by the US Department of Labor. The report publishes the employment creation estimates of the previous month and reviews in the data of the previous two months. Monthly changes in payrolls can be very volatile and the publication of this report generates high volatility in the dollar. A result superior to the market consensus is bullish for the dollar, while a result lower than expectations is bassist.
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Last publication:
old age 01, 2025 12:30
Frequency:
Monthly
Current:
73K
Dear:
110K
Previous:
147K
Fountain:
US Bureau of Labor Statistics
The United States Monthly Employment Report is considered the most important economic indicator for foreign exchange operators. Published the first Friday following the informed month, the change in the number of employees is closely related to the general performance of the economy and is monitored by those responsible for the formulation of policies. Full employment is one of the mandates of the Federal Reserve and considers the evolution of the labor market by establishing its policies, which affects the currencies. Despite several advanced indicators that shape estimates, non -agricultural payrolls tend to surprise markets and trigger substantial volatility. The real figures that exceed consensus tend to be bulls for the USD.
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.
