- The Canadian dollar remained stable against the US dollar on Tuesday, but volatility persists.
- The body briefly gained ground against the dollar before going back to opening offers.
- Tariff conversations remain the key ingredient in the feeling of the market this week in the middle of the publication of medium level data.
The Canadian dollar (CAD) fought on Tuesday, briefly gaining ground against the US dollar (USD). Risk aversion flows were again in the fore and pushed CAD back to the opening offers of the day just below 1,3700.
Tariff conversations are again at the top of the market holders. Earlier this week, the Trump administration postponed its own self -imposed term to implement reciprocal tariffs that were announced in early April and then immediately delayed until July 9. Trump’s team has now delayed tariffs already delayed until August 1, with President Donald Trump insisting that this time there will be no more delays, and also added more threats of tariffs to the import tax battery that may or may not be to come.
What moves the market today: the Canadian dollar struggles to find profits amid the growing risk aversion
- The Canadian dollar remains on the low side of the short -term market action while risk aversion flows reinforce the dollar.
- The continuous downward trend of the US dollar in front of the CAD could be close to its end as commercial investors and operators begin to yield under the peso of an amorphous commercial landscape.
- President Trump has announced increases in two -digit tariffs against a handful of countries, including South Korea and Japan, which will enter into force on August 1.
- President Trump also announced a 50% tariff over all copper imports to match existing tariffs on steel and aluminum.
- Despite announcing that copper tariffs would begin “today”, nobody knows if that will really be carried out.
Prognosis of the price of the Canadian dollar
Despite staying below a descending trend line about 1,3700, the USD/CAD is beginning to bow to the high side. Daily candles are ready to mark a double floor graphic pattern, noting that a long -term reversion in the continuous weakness of the dollar could be approaching on the horizon.
USD/CAD DAILY 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.
