- The Canadian dollar remains stable after reaching new maximums against the US dollar.
- Canadian economic data are strictly low level this week; Inflation and commercial data will dominate.
- The feeling of the market will depend on the commercial conversations between the US and China, the inflation of the CPI and the expectations of consumer inflation.
The Canadian dollar (CAD) pauses after a new impulse towards eight months against the US dollar (USD) last week. The Loonie has gained ground or remained stable against the US dollar in all but four of the last 15 consecutive sessions, and the recent decision to maintain the rate of the Canada Bank (BOC) broke a streak of seven feat cuts, giving the CAD bidders a new impulse.
The Canadian markets now face a long week full of headlines on the commercial war and key economic data of the United States after the US and China spent two weeks disagree with trade, the Trump administration and delegates of the Chinese government of Xi Jinping are currently negotiating commercial details in London.
Investors overwhelmingly expect the US president, Donald Trump, to find once again a reason to go back to their own threats of tariffs and commercial restrictions disguised as proclamations. In the front of the data, the impact of prices of the first tax attacks on Trump imports, announced at the beginning of the second quarter, begins to leak into the general inflation data, just when consumer inflation expectations begin to cool.
What moves the market today: the Loonie keeps the profits while the commercial conversations dominate
- After the first decision to maintain the BOC rate after seven consecutive cuts, CAD markets are looking at a thin week in the economic data calendar.
- The USD market flows will continue to dominate as geopolitical holders on trade are filtered through commercial conversations between the US and China and US inflation data is coming in the following week.
- It is expected that US IPC inflation will begin to increase as Trump tariffs begin to impact general inflation data.
- Consumer inflation expectations may be moderating according to the New York Federal Reserve Bank survey data.
- Investors will wait for the results of the consumer inflation expectations of the University of Michigan (UOM) that will be published at the end of the week.
Prognosis of the price of the Canadian dollar
The Canadian dollar remains stable near the maximum eight months against the US dollar. The recent weakness of the US dollar has combined well with the decisions of maintaining the Boc rates, helping to maintain the USD/CAD torque below the 1,3700 zone.
A firm downward trend from the February maximum is well established. However, technical oscillators are firmly in overall territory, and although the rebound may not be sufficient to break the prevailing trend, it could be a sign that a setback is brewing for exhaustion.
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.
