- The Canadian dollar briefly tested a maximum of three days before losing bullish impulse.
- Loonie markets are falling together with crude oil markets in decline.
- The tensions between Israel and Iran are destined to continue decreasing, dragging the dollar offers.
The Canadian dollar (CAD) failed in its short -term upward pivot on Tuesday, rising against the dollar before falling back to family levels. The Loonie gained ground after the global prices of crude oil shot at the increase in tensions between Israel and Iran, but a high fragile fire has trimmed barrel offers, taking the mat to the CAD bulls.
The inflation figures of the Canadian consumer price index (IPC) mostly arrived as expected on Tuesday. The medium forecasts of the market were right in price growth estimates, resulting in little or no impact on the market. As most Canadian inflation data continue to arrive in or below the objectives of the Canada Bank (BOC), the strip and loosen on when the Boc will resume the cuts of rates will probably continue.
What moves the market today: the Canadian dollar yields to intradic profits as crude oil prices fall
- The Canadian dollar went up on Tuesday while Loonie buyers tried to extend to a second day of CAD profits, but the fall in barrel prices cut the rising impulse.
- Israel and Iran are ready to maintain a fragile high -fire agreement mediated by US President Donald Trump, but an exchange of missiles hours after the agreement caused a Trump’s anger on Tuesday.
- The inflation of the Canadian CPI in May remained close to the medium market forecasts on Tuesday. The Annualized underlying IPC of the BOC remained stable by 2.5% year -on -year, and the general CPI inflation increased by 1.7% interannual as expected.
- The Boc is expected to resume its rate of feat cuts, but the debate about when and to what extent remains ongoing in the fees negotiation markets.
- The only thing that remains on the Canadian side of the economic data agenda this week will be the Gross Domestic Product (GDP) level figures, which will be published on Friday. The growth of the Canadian GDP is expected to remain in a 0.0% intermensual plane in April.
Prognosis of the price of the Canadian dollar
Despite closing even right within the Alcista territory, the Canadian dollar is still prepared to break a short -term recovery. The USD/CAD torque has touched the upper end of a descending channel above the 1,3750 region, which implies that a new thrust down in the graphics in favor of the dollar should be resumed after the rising pressure dissipates.
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.
