- The Canadian dollar tested a new eight months against the US dollar on Thursday.
- The general market impulse remains limited before the key NFP employment figures in the US
- The profits of the Canadian dollar could be limited from here, since Canadian companies fear an economic recession.
The Canadian dollar (CAD) tested new eight -month peaks against the US dollar (USD) on Thursday. However, CAD profits remain limited: the US non -agricultural payroll figures (NFP) will close the negotiation week, and investors are growing apprehensive about work factors and economic growth on both sides of parallel 49.
The Bank of Canada (Boc) maintained stable interest rates this week after seven consecutive cuts, helping to boost the CAD. However, the upward impulse remains limited as Canadian companies become increasingly cautious about deterioration economic conditions.
Daily summary of market movements: the Canadian dollar test tallest ground while the dollar is agitated
- The Canadian dollar briefly tested new maximum eight months against the US dollar, sending the USD/CAD below 1,3650 for the first time since October last year.
- The feeling of the market is still tense as investors prepare for the publication of US NFP data data on Friday.
- It is expected that US NFP employment gains for May will slow 130K against the previous printing of 177K.
- The feeling of investors is still more restricted as merchants observe how US president Donald Trump, and Trump’s former chief, Elon Musk, face each other on social networks.
- Canadian labor data are about to be eclipsed on Friday by the long shadow of NFPs, however, that could be the best for CAD bullies: the net change in Canadian employment is expected to contract in 15K net jobs in May, eliminating the low growth of April 7.4K.
Prognosis of the price of the Canadian dollar
The Canadian dollar has gained ground or remained stable against the US dollar in all but two of the last 16 consecutive negotiation sessions, pushing new minimums of several months below 1,3650. The torque has fallen 2.72% from top to bottom from the maximum of May in 1,4015, and the long -term downward trend channels maintain the price of the price trapped in bearish rails.
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.
