- The Canadian dollar sharply cut the short -term profits on Friday.
- The US president Donald Trump has announced that his team is finishing all commercial negotiations with Canada.
- The growth of the Canadian GDP contracted in April, adding more downward pressure on CAD flows.
The Canadian dollar (CAD) retreated on Friday, falling due to a combination of Gross Domestic Product Growth (GDP) weakened Canadian and new commercial tensions with the US president Donald Trump. Trump’s team seems to be raising anchors and completely abandoning the commercial negotiation table, with Donald Trump announcing that he would take his ball and go home in a publication on social networks on Friday afternoon.
The growth of the Canadian GDP contracted in April, slightly hitting the feeling of the CAD. Among the downward inflation data and the decreasing growth prospects, investor bets for a new batch of feature cuts from the Canada Bank (BOC) are increasing.
What moves the market today: the Canadian dollar collapses in the middle of a slow growth and new tariff threats of Trump
- The Canadian dollar cut the short -term profits, falling against the dollar and reinforcing the USD/CAD torque at the level of 1,3750 on Friday.
- The Canadian GDP contracted 0.1% in May. The growth figure has little weight independently, but adds a little more confidence to the operators who bet on a return to the trim cuts of the BOC.
- The president of the USA Donald Trump proclaimed through a publication publication on Friday that would withdraw the US from commercial negotiations with Canada completely.
- Donald Trump mistakenly attributed the levels of dairy tariffs that are already covered under his own USMCA commercial agreement that he negotiated during his first term, and declared that he would announce more tariffs on Canada in the next seven days.
- President Trump seems to be frustrated because Canada is closing a predatory fiscal lagoon that allows US technology companies to sell their products in Canadian markets without taxes. The new rate that will enter into force on cross -border technological services has been in preparation for years, but the Trump administration has waited until the last moment to raise all anchors.
Prognosis of the price of the Canadian dollar
A new bullish pivot in the USD/CAD torque, reinforced by a new round of weakness, has pushed the corporate couple back to a line of descending tendency drawn from maximum of several decades reached in January. The general impulse of the trend is still inclined in favor of the Canadian dollar, since the US dollar yields under the weight of the global sales pressure, but the short -term shocks in the stability of the CAD could see the USD/CAD go back to the high side and challenge the exponential mobile (EMA) average of 200 days about 1,3950.
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.
