- The Canadian dollar remained stable near the technical level of 1,3700 against the US dollar on Wednesday.
- A short -term bullish turn in CAD offers vanished, but the downward impulse is still limited for now.
- The CAD operators stayed with few Canadian economic data to analyze until the middle level GDP figures on Friday.
The Canadian dollar (CAD) broke a weak two -day earnings streak against the US dollar (USD) on Wednesday. The CAD cut limited profits against the dollar, but remained stable near the level of 1,3700 during the market session in the middle of the week.
The CAD operators are still in a limbo since the economic data centered on the CAD remains limited after the publication of the Consumer Price Index (CPI) this week that failed to impress anyone. Monthly figures of Gross Domestic Product (GDP) are expected of a medium level for Friday, but they are unlikely to have a great impact.
Daily summary of market movements: the CAD remains stable despite running out of bullish impulse
- The Canadian dollar failed in an upward recovery against the dollar, staying close to the recent minimum.
- The USD/CAD pair is stuck at the 1,3700 level while the impulse runs out in the graphics.
- According to reports, Russia will seek to increase the production of crude oil along with the rest of the organization of exporting oil countries (OPEC) expanded, also known as OPEC+.
- Increases in the global production of crude oil could depress barrel prices, exerting greater downward pressure on the CAD.
- The Canadian GDP, which will be published on Friday, is expected to fall to a 0.0% MOM plane in May.
Prognosis of the price of the Canadian dollar
The short -term recovery of the Canadian dollar has reached a final steep, finding the USD/Cad torque sliding down the top of a descending range. The USD/CAD is still set at the level of 1,3700 at the moment, but the technical oscillators are leaving the territory of overalls, which implies that the dollar could be prepared for a new bullish race compared to CAD.
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.
