- The Canadian dollar fell 0.66% against the dollar on Thursday.
- The feeling of the market has backed the US dollar widely while investors expect advances in the trade agreement.
- Tariffs are still the main concern for operators, clinging to the announcement of the commercial agreement between the US and the United Kingdom.
The Canadian dollar (CAD) reached a point under Thursday, extending to a second consecutive day of losses while the US dollar (USD) captures a wide demand with the hope that the Trump administration accelerates the signature of trade agreements to avoid its own self -imposed commercial tariffs. The details are still scarce and nothing has been formalized, but the announcement of a pending commercial agreement between the United States (USA) and the United Kingdom (UK) has strengthened the feeling of the market, promoting the dollar in general.
Commercial tensions remain high between Canada and the US, and it seems unlikely that a rapid change in tariffs between the two countries will occur soon. The US is incredibly dependent on Canada’s key imports, including assembly cars, automotive vehicles, light crude oil from the bituminous alberta sands and critical agricultural fertilizers. 90% of US pota supplies are imported, since the country cannot produce enough to meet its domestic demand.
Daily Market Summary: The Canadian dollar goes back to the widespread hopes of the market for commercial agreements
- The Loonie collapsed two thirds of one percent against the US dollar on Thursday, sending the USD/CAD a maximum of several weeks about 1,3930.
- The USD/CAD has earned 1.23% of minimum to maximum in two days while the feeling of the market boosts the dollar again.
- Nothing has been signed or formalized, and the key details are still scarce, but the Trump administration hastened to announce a commercial agreement pending with the United Kingdom (UK) on Thursday, feeding the hopes of the market that President Trump will find a way to avoid his own self -imposed tariffs.
- The grace period on “reciprocal tariffs” ends on June 9.
- Despite an imminent commercial agreement, almost all goods imported to the US from the United Kingdom will continue to be subject to 10%tariffs, and President Trump was quick to warn that other countries will probably not obtain such a good “agreement” in future commercial negotiations. This gives other countries few reasons to continue approaching the negotiating table.
- Tariffs are being completely exempt in key assets of the United Kingdom, such as refined ethanol, which US has not imported from the United Kingdom in more than 15 years.
Canadian dollar forecast
A two -day drop for the Canadian dollar, largely driven by a general recovery in the dollar demand, has pushed USD/CAD above 1,3900 for the first time since the beginning of April. The US dollar was severely beaten in general after the Trump administration announced “unequal” reciprocal “tariffs in all its commercial partners, but the USD/CAD has marked an irregular technical floor near the 1,3800 region.
A continuous technical recovery in the USD/CAD still faces winds against significant: the 200 -day exponential mobile average (EMA) floats above 1,4030. The 50 -day EMA is about to form a bearish crossing, which could indicate an additional long -term fall.
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.
