- The Canadian dollar reduced short -term losses on Thursday.
- A massive sale of the US dollar in the general market is pushing CAD again towards the upper part.
- The medium -level Canadian GDP figures will collide with the US PCE inflation data on Friday.
The Canadian dollar (CAD) found upward space on Thursday, rising to its highest offers in more than a week against the US dollar (USD) as the global markets move away from the dollar, giving the countervalues ​​an impulse in all areas. From a broader point of view, the dollar has been pushed to minimum of several years, giving the Canadian dollar the opportunity to test its highest offers against USD since October last year.
The figures of the Gross Domestic Product (GDP) Canadian will be published on Friday, but the publication of medium level data is unlikely to move the CAD markets. Not only does the sample of a single month are too small to draw significant conclusions, but will be eclipsed by the inflation data of the US Personal Consumption Expenditure Index (PCE) that will be published in the same launch window.
Daily summary of market movements: the Canadian dollar wins when the dollar loses
- The Canadian dollar rose to its highest offers against the US dollar in more than a week, pushing the USD/CAD towards the level of 1,3600.
- Without any immediate crisis in geopolitical holders, the feeling of global investors is increasing, pushing the dollar down in all areas.
- The recent geopolitical tensions around the Middle East and the US trade tariffs have calmed down, giving market participants the opportunity to resume the departure of safe shelters.
- Canadian GDP figures for the month of April will be published on Friday and are expected to remain stubbornly flat at 0.0% intermensual.
- The figures of the US PCE inflation index for the year that ended in May will also be published on Friday. It is expected that the annualized underlying inflation of the US PCE rises to 2.6% year -on -year from 2.5%.
Prognosis of the price of the Canadian dollar
New profits for the Canadian dollar due to the general weakness of the US dollar have pushed the USD/CAD towards the level of 1,3600, registering a rejection of the descending lines of trend in daily candles. An extended decline, which would see the body gain more ground against the dollar, will need to break the last oscillation minimum that invested the direction just above 1,3500.
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.
