- The Canadian dollar further retreated on Monday, falling more than 0.5% against the dollar.
- The feeling of the market is generally capturing offers as the tariffs dominate the owners.
- CAD markets are in the background for a week with few data.
The Canadian dollar (CAD) fell more on Monday, losing around half a percentage point against the US dollar (USD) while investors in general bid for the dollar after the announcement of Trump’s government that they would retreat their own three -digit tariffs on Chinese imports. The initial commercial conversations between the US and China during the weekend resulted in a 90 -day relief from US tariffs about Chinese goods that reached 145% to April. The US will maintain a 30% tariff on most Chinese imports, and China will maintain its own 10% tariff on the imported goods of the USA while both countries agree to go to the negotiating table for more commercial discussions in the coming months.
This week, the economic data agenda for the Canadian dollar is scarce. The CAD is prepared to remain influenced by the general feeling of the market. With the US dollar ready to continue gaining land on all fronts thanks to the recovery of the feeling of the market, the CAD is exposed to more falls unless there are significant changes in the fundamentals of the market.
Daily summary of market movements: the Canadian dollar extends losses while the feeling of the market reinforces the dollar
- The Canadian dollar fell 0.5% against the US dollar, pushing the USD/CAD up to the 1.4000 level and putting the way to make a new attempt in the 200 -day exponential mobile average (EMA) about 1,4030.
- The US tariffs on Chinese goods will be reduced to 30% from 145% as of Tuesday.
- This week’s economic data agenda is overwhelmingly inclined towards the US dollar, with strict low -level data launches for the Canadian dollar scattered throughout the week.
- The key inflation data of the US Consumer Price Index (ICC) will be published on Tuesday while markets are attentive to acute inflation signs due to US commercial tariffs.
- The inflation data of the US Production Price Index (PPI) and retail sales figures are expected for Thursday.
- The medium market forecasts expect a change in the figures of the consumer’s feeling index of the University of Michigan to close the week on Friday.
Prognosis of the price of the Canadian dollar
A four -day (and counting) loss streak for the Canadian dollar has pushed the USD/CAD torque to the territory of challenge of long -term mobile socks, and the CAD could be on the way to start another long -term movement towards the lower end. The bullish rotations in the USD/CAD graph have tended to support a long -term upward trend in the graph that has persisted since mid -2021.
Although the probabilities are firmly inclined in favor of the dollar, the technical oscillators have quickly pivoted towards overcompra territory, which implies that there could be a relief in the offers for the dollar before another rising movement.
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.
