- The Canadian dollar found more profits thanks to the sale pressure of the US dollar.
- The lack of significant Canadian economic data means that CAD profits are at the mercy of market flows.
- Geopolitical tensions in the Middle East are increasing, maintaining appetite due to risk under control but promoting crude oil prices.
The Canadian dollar (CAD) received another offer on Friday, rising to new eight -month maximums while the US dollar (USD) remains in place and crude oil prices are fired. Geopolitical tensions are increasing after Israel launched a surprise attack against Iranian nuclear facilities late on Thursday, pushing investors out of their risk position, although slightly. The feeling figures of the consumer in the US rugged strongly last month, further limiting the downward impulse in the general feeling of investors.
The significant Canadian data remain limited on the economic agenda over the next weeks. The CAD operators will be cautious for the key canadian inflation figures that will be published at the end of the month; However, the data vacuum between now and then leaves the CAD completely at the mercy of how the markets feel with respect to the dollar and tensions in the Middle East overnight.
What moves the market today: the Canadian dollar advances, backed by crude oil
- The Canadian dollar received an impulse from the side effects of the market, being pushed up due to the increase in prices of crude oil after Israel’s air attack to Iranian nuclear facilities.
- The chain effects sent to the USD/CAD torque below the level of 1,3600 for the first time since last October, keeping the US dollar anchored at least eight months against CAD.
- The figures of the consumer’s feeling index of the University of Michigan for the USA in May rebounded stronger than market projections predicted.
- The consumer’s perception about economic factors, especially negatives, usually exceeds reality and is often exhausted before negative effects can really feel in the economy in general. The generalized negative perceptions on the “policies” tariffs of the Trump administration are probably not different.
- Another decision of rates of the Federal Reserve (FED) is scheduled for next week, but it is widely expected to be in another pause in interest rates, since those responsible for Fed policies remain cautious against the downward clashes of Donald Trump’s tariffs.
- Another pause in rates will probably attract more criticism from the White House, but the markets have already discounted the next rate cut in September.
Canadian dollar forecast
The Canadian dollar continues to gain ground against the US dollar, due more to external factors than any intrinsic fortress. The USD/CAD continues to operate on the low side of the downward trend lines from maximum of several decades reached at the beginning of the year, although a unilateral impulse could be prepared for a corrective movement with technical oscillators buried in overall territory.
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.
