- The Canadian dollar retreated against the dollar for the third consecutive day.
- The impulse of the Loonie, completely driven by bearish flows of the US dollar, is being beaten by a negative feeling of investors.
- Tensions in the Middle East continue to increase while the Trump administration considers to be structurally involved.
The Canadian dollar cut recent profits on Thursday, decreasing against the US dollar for the third consecutive day. Global markets are becoming increasingly negative because the Trump administration not only fails to quickly and silently resolve the Israel-Iran conflict, but also openly raises the idea that they could directly involve US military assets directly in the dispute.
Economic data is still limited on the side of the Loonie; However, CAD operators will be waiting for the inflation of the Canadian consumer price index (IPC) next week. It has been a particularly dry period on the Canadian side of the economic data agenda since the last decision of the Bank of Canada (BOC), where the Boc broke a streak of seven cuts of consecutive rates.
Daily summary of market movements: dark markets for mid -week vacations, but market tensions continue to increase
- The Canadian dollar lost peso against the US dollar, pushing at the USD/cad torque at 1,3700 level.
- Market tensions are increasing as Israel-Iran conflict continues to intensify.
- According to reports, the Trump administration is actively participating in conversations with Iranian officials.
- Despite the background conversations, President Donald Trump is still considering directly involving the US in the dispute, which would represent the first time that USA directly displays military assets in a foreign country from the invasion of Iraq in 2003.
- Despite the insistence of the Israeli government for an answer on the participation of the US in one or two days, the White House Secretary, Karoline Leavitt, announced that Trump’s team would make a decision “in a couple of weeks”, a notoriously popular schedule for Trump’s observers.
Prognosis of the price of the Canadian dollar
A third consecutive day of falls has forced the Loonie to a lower territory against the US dollar, pushing the USD/Cad back to the 1,3700 region. A possible short -term bullish rebound could run out of space quickly, since the descending lines of the peaks of several decades established in January are still at stake.
USD/CAD DIARY 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.
