- The Canadian dollar rose again on Wednesday, reducing the position of the dollar.
- A decline in the wide market of US dollar offers has strengthened CAD again at the upper end.
- Despite the profits, the Canadian dollar is still in a precarious position while Canadian economic data continue to weaken.
The Canadian dollar (CAD) rose on Wednesday, earning another one third of one percent while the bass impulse of the US dollar gives more land. The CAD profits are being completely driven by the sale pressure of the USD, putting the CAD bulls in a complicated situation and making exchange operations an injured trip.
The figures of the purchasing managers index (PMI) of Canadian manufacturing backed up in June, falling to 45.6 while the Canadian economy continues to fail before an current commercial war with the US. Boc, even when more interest rate cuts begin to affect the yields of Canadian bonds, already cause more increases in housing prices already disabled due to the increase in mortgage rates.
What moves the market today: the Canadian dollar takes another step up despite PMI’s expectations in decline
- The Canadian dollar is back in a maximum of several weeks, pushing the USD/CAD torque below 1,3600.
- The wide sale of the dollar is giving an impulse to CAD.
- The figures of the Canadian manufacturing PMI arrived on the low side in June while companies continue to adopt a defensive position against the tumultuous commercial problems with the US.
- The US Non -Agricultural Payroll (NFP) data are of great relevance on Thursday, with Friday planned to be a day of little activity. The US markets will be closed by a holiday on Friday, functionally giving the market an anticipated weekend.
- The US employment change figures arrived significantly below the forecasts, generating new concerns about an economic deceleration that is coming in the US.
Prognosis of the price of the Canadian dollar
Wednesday’s CAD earnings have approached the Canadian dollar to maximum of several years against the US dollar, and the USD/CAD pair continues to slide to the low side while the US dollar sinks in front of the CAD. The impulse remains firmly rooted in the CAD camp, with space to continue advancing even incorporated into the technical oscillators. The USD/CAD continues to follow a descending channel, and a technical floor could be incorporated into the graphics near the 1,3500 region.
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.
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