- The Canadian dollar remained in family territory on Friday.
- The CAD is caught in a hard congestion zone against the US dollar.
- CAD operators are forced to wait through a long weekend before the key data of Canadian inflation.
The Canadian dollar (CAD) continued its starting pattern and goings against the US dollar (USD) on Friday. The CAD cut the profits of the previous day and kept the USD/CAD near the level of 1.4000. Global market attention remains firmly focused on the constant commercial policy strategy of the Trump administration, maintaining appetite for the risk of investors trapped in a ignition and off cycle.
The last round of Canadian inflation data is just around the corner, with the Canadian consumer price index (CPI) scheduled for next Tuesday. However, the CAD operators will first have to survive a long weekend with the Canadian markets closed by the next Victoria Day holiday on Monday.
What moves the market today: the Canadian dollar is still trapped in a bump
- The Canadian dollar continues to rotate in the graph near the level of 1.4000 against the US dollar. The CAD lost a fifth of one percent against USD on Friday, keeping USD/CAD firmly embedded in a short -term consolidation.
- The feeling of the consumer of the University of Michigan (UOM) showed another fall in the economic expectations of consumers, sinking the second lowest level recorded for the key feeling indicator.
- Consumer inflation expectations in the US have also increased to maximum of several years, since tariff price impacts are coming just on the horizon.
- Wall Street has largely ignored the deterioration of consumer’s feeling; However, consumers and investors share concerns about tariffs.
- The inflation figures of the Canadian CPI will be published next week; Inflation of the general CPI for the year ended in April is expected to drastically fall to 1.6% year -on -year, and stand well below the target range of 2% of the Canada Bank (BOC).
Prognosis of the price of the Canadian dollar
Mediocrity is the name of the CAD game in the recent action of the graph. The USD/CAD remains firmly rooted in a consolidation phase, with offers trapped just south of the 1.4000 level. The price action has stagnated in the 200 -day exponential (EMA) mobile average, and a significant thrust will be needed to generate a break and a new test of key technical levels before a trend can be established in any direction.
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.
