- The Canadian dollar remained flat against the US dollar on Thursday.
- The CAD markets remain limited while the weakness of the USD collides with the lowest prices of crude oil.
- The key feeling of the US consumer are just around the corner, Canadian data must wait until next week.
The Canadian dollar (CAD) did not advance quickly on Thursday, with the CAD struggling to find impulse in any direction. The US dollar (USD) was slightly lower during the day, however, another decrease in the intradic prices of crude oil withdrew the support of the CAD, keeping the USD/CAD torque at a level of family congestion just below 1,4000.
Key Canadian economic data are ahead next week, but the market markets must survive a new publication of feeling of the US consumer of the University of Michigan (UOM) on Friday, as well as a long weekend with the Canadian markets closed by the Victoria Day holiday next Monday. The CAD operators will return on Tuesday, just in time for a new inflation update of the consumer price index (CPI).
The US dollar is generally weaker on Thursday, which would normally be enough to force the CAD to rise slightly. However, a new downward blow to crude oil prices is stripping of the Canadian dollar support, keeping the CAD firmly tied against the US dollar.
Daily summary of market movements: Canadian dollar caught in a stagnation on Thursday
- The Canadian dollar remained buried in a flat containment pattern, caught in family territory while the USD/CAD pair revolves around 1.4000.
- CAD operators are heading over a long weekend, they just have to survive first Friday.
- The inflation figures of the Canadian IPC that will be published next Tuesday will attract a lot of attention to the CAD while investors wonder how much the interest rates will cut the Canada Bank (BOC).
- The US Price Price Index (IPP) of the US.
- The consumer index of the May UOM will be published on Friday, and markets expect US consumers to suddenly feel better about how much they have to pay for the goods that come from other countries.
Prognosis of the price of the Canadian dollar
The USD/CAD continues to turn just below the level greater than 1.4000. The torque is trapped in a short -term consolidation phase near the 200 -day exponential (EMA) mobile average about 1,4030, which makes it difficult to have a sudden movement in any direction.
Depending on how you see the market, a new round of weakness of the CAD, or strength of the dollar, pushed the USD/CAD up from the short -term minimums about 1,3750. The technical oscillators have entered over overcompra territory, showing warning signs that the pair could be prepared for a new bearish thrust. However, a downward movement could be seen as a technical correction instead of an absolute change in the impulse in the medium term.
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.
