- USD/CAD recovers to 1.3500 in a swinging session.
- Canada takes a backseat, with strictly low-level data.
- US CPI inflation decreased, but less than expected.
He Canadian dollar (CAD) traded mixed on Tuesday, with no changes or modest gains against some of its major currencies, while losing points against the US dollar (USD). Headline US Consumer Price Index (CPI) inflation was higher than expected, but headline CPI inflation eased, helping to reinforce the Federal Reserve's (Fed) rate cut bets.
Only some low-level economic data will be released in Canada this week, so the Canadian Dollar will be exposed to broader market flows. Canadian manufacturing sales for January will be released on Thursday and housing starts in February will be released on Friday. Neither data is expected to move the needle significantly.
Daily Market Movements Summary: US Headline CPI Inflation Falls, But Less Than Expected
- US headline CPI inflation for the year ended February rose to 3.2% year-on-year, compared to the expected 3.1%.
- The US core CPI fell to 3.8% year-on-year from 3.9% previously, but remains above the average market forecast of 3.7%.
- MoM CPI rose to 0.4%, as expected, accelerating slightly from 0.3% previously.
- The monthly core CPI remained at 0.4%, compared to the expected decrease of 0.3%.
- On Thursday, markets will focus on the Producer Price Index (PPI) and US retail sales for February.
- The February core PPI is expected to decline to 1.9% from 2.0% previously.
- February month-on-month retail sales are forecast to rebound to 0.8%, up from -0.8% previously.
- The March consumer sentiment index from the University of Michigan will be published on Friday, which will remain at 76.9 points.
Price of the Canadian Dollar today
Below is the percentage change of the Canadian Dollar (CAD) against the main currencies listed for today. The Canadian dollar was the weakest currency against the US dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.12% | 0.26% | 0.16% | 0.28% | 0.68% | 0.40% | 0.09% | |
| EUR | -0.12% | 0.14% | 0.04% | 0.15% | 0.54% | 0.27% | -0.03% | |
| GBP | -0.27% | -0.14% | -0.11% | -0.01% | 0.40% | 0.14% | -0.16% | |
| CAD | -0.16% | -0.04% | 0.11% | 0.10% | 0.50% | 0.23% | -0.03% | |
| AUD | -0.26% | -0.14% | 0.01% | -0.09% | 0.40% | 0.14% | -0.15% | |
| JPY | -0.68% | -0.54% | -0.40% | -0.51% | -0.43% | -0.27% | -0.56% | |
| NZD | -0.39% | -0.26% | -0.14% | -0.21% | -0.11% | 0.28% | -0.29% | |
| CHF | -0.10% | 0.04% | 0.17% | 0.06% | 0.13% | 0.55% | 0.29% |
The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen in the left column, while the quote currency is chosen in the top row. For example, if you choose the euro in the left column and scroll down the horizontal line to the Japanese yen, the percentage change in the box will represent EUR (base)/JPY (quote).
Technical Analysis: USD/CAD returns to known technical levels near 1.3500
On Tuesday, the Canadian Dollar (CAD) fell by about a fifth of a percentage point against the US Dollar, but remained virtually flat against the Euro (EUR) and Swiss Franc (CHF). The Antipodes and the Japanese Yen (JPY) lost ground against the CAD.
The USD/CAD pair has returned to the 1.3500 area, after a choppy session early on Tuesday. It bounced from 1.3470 and fell sharply from 1.3520. The pair moves between 1.3450 and 1.3590.
A bullish turn in USD/CAD will bounce bids off the 200-day SMA at 1.3478, and the way is open for buyers to explore the 1.3600 area as a pattern of higher highs brews. the graphic. On the bearish side, if it fails to reach north of the 200-day SMA, the pair will return to the low bids of early February near 1.3360.
USD/CAD hourly chart
USD/CAD daily chart
Frequently Asked Questions about the Canadian Dollar
What factors determine the price of the Canadian dollar?
The key factors that determine the price of the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of oil, Canada's main export product, the health of its economy, inflation and the trade balance, which is the difference between the value of Canadian exports and its imports. Other factors are market confidence, that is, whether investors bet on riskier assets (risk-on) or look for safe assets (risk-off), with the risk-on being positive for the CAD. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian dollar.
How do Bank of Canada decisions affect the Canadian dollar?
The Bank of Canada (BoC) exerts significant influence over the Canadian Dollar by setting the level of interest rates that banks can lend to each other. This influences the level of interest rates for everyone. The BoC's main objective is to keep inflation between 1% and 3% by adjusting interest rates up or down. Relatively high interest rates are usually positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former being negative for the CAD and the latter being positive for the CAD.
How does the price of oil affect the Canadian dollar?
The price of oil is a key factor influencing the value of the Canadian Dollar. Oil is Canada's largest export, 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, as aggregate demand for the currency increases. The opposite occurs if the price of oil falls. Higher oil prices also tend to lead to a higher probability of a positive trade balance, which also supports the CAD.
How does inflation data influence the value of the Canadian Dollar?
Although inflation has traditionally always been considered a negative factor for a currency, as it reduces the value of money, the opposite has actually happened in modern times, with the relaxation of cross-border capital controls. Higher inflation often leads central banks to raise interest rates, attracting more capital inflows from global investors looking for a lucrative place to store their money. This increases the demand for the local currency, which in the case of Canada is the Canadian Dollar.
How does economic data influence the value of the Canadian dollar?
The published macroeconomic data measures the health of the economy and may have an impact on the Canadian dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can influence the direction of the CAD. A strong economy is good for the Canadian dollar. Not only does it attract more foreign investment, but it may encourage the Bank of Canada to raise interest rates, resulting in a stronger currency. However, if 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.
