- The Canadian dollar rose against the US dollar on Tuesday.
- The inflation metrics of the Canadian IPC of the BOC increased in April.
- The Loonie remains agitated in the medium -term consolidation territory against the dollar.
The Canadian dollar (CAD) found a support on Tuesday, achieving a slight gain against the US dollar (USD). However, the profits were limited after the Consumer Price Index itself (CPI) Canadian increased even faster than expected in April, pointing out that the frantic cycle of rates cuts from the Canada Bank (BOC) could be reaching its end.
Canadian inflation accelerated again in April, with key IPC indicators increasing more than expected in April. The BOC has been in a cycle of rate cuts, making seven consecutive cuts, including two double cuts of 50 basic points since a cycle of cuts began in June 2024. The Canadian interest rate has collapsed since its 5% peak reached in 2023, dragging the key rate of the Central Bank to 2.75% this March. With the Canadian inflation again increased, and the prices of housing in Canada apparently without receiving the message that the BOC is trying to use the cuts of fees to improve the affordability of the house, the Boc window to cut rates could have been closed now.
Daily summary of market movements: the Canadian dollar captures some offers, but the profits are still limited
- The Canadian dollar rose on Tuesday, increasing a scarce a sixth part of one percent against the dollar.
- Despite short -term profits that slightly support the Loonie, the CAD remains down against the US dollar in recent weeks.
- The inflation of the Canadian IPC increased by 1.7% year -on -year in April, lowering from the previous 2.3% but still exceeding expectations.
- The measure of the underlying IPC of the BOC accelerated to 2.5% year -on -year, rising from 2.2% of the previous period.
- The underlying IPC of the Boc rose sharply in monthly terms in April, accelerating to 0.5% monthly compared to 0.1% in March.
Prognosis of the price of the Canadian dollar
The Canadian dollar has had a slight impulse in the short term, rising 0.7% against the dollar compared to the minimum of last week. However, the CAD remains down against the US dollar in recent weeks, and USD/CAD offers follow 1.2% above its minimum of several months about 1,3750.
The 200 -day exponential mobile average (EMA) is demonstrating to be a hard technical barrier for the USD/CAD torque, firmly parked near the level of 1,4025. The price of the price pivoted towards an upstream of the USD in recent weeks, however, the torque has so far avoided making an attempt determined in the key mobile average.
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.
