- The Canadian dollar briefly rose to a new five -week maximum against the US dollar.
- Despite the new offer, the CAD backed away a family congestion as risk aversion weighs.
- The Trump administration is determined to impose broad tariffs, harming the feeling of investors.
The Canadian dollar (CAD) toured a lot of land so as not to go anywhere on Wednesday. The CAD rose to a new five -week peak against the US dollar (USD), but lost ground and returned to plane at the day as the feeling of investors is beaten by a new lot of tariff threats from US president Donald Trump.
Large scope tariffs are becoming a true threat to the feeling of investors after the Trump administration remembers that they still plan to pursue a packet of tariffs that it covers from copper, to cars, and “reciprocal” tariffs on virtually all countries with which the US does business. Countries that import crude oil from Venezuela are also on the list to receive an additional 20% tariff, about everything that enters the US, and European Union officials (EU) made concerns about tariffs become very real to recognize that the EU is preparing for tariffs of 20-25% over all goods imported by the US
What moves the market today: the Canadian dollar goes up and then falls as the flight to assets shelter takes control
- The Canadian dollar rose four tenths of one percent to a new maximum of five weeks before falling back to Wednesday’s opening offers as the CAD operators lose hope.
- US President Donald Trump reiterated his intention to introduce a general tariff on all copper imports to match the previous tariffs on steel and aluminum.
- The EU acknowledged that a 20-25% tariff package on all European goods could come from the Trump team, in addition to an additional 20% tariff for buying crude oil from Venezuela.
- Fears on tariffs continue to boil and have begun to overflow, affecting the feeling of investors.
- Those responsible for US policies are beginning to show warning signs that Trump’s tariff strategy is making interests of interest rates difficult.
Prognosis of the price of the Canadian dollar
The Canadian dollar captured a new offer against the US dollar to initiate Wednesday’s price action, forcing USD/CAD to a new minimum of five weeks in 1,4235. However, the markets invested the course and pushed the pair back towards the level of 1,4300. The USD/CAD has been oscillating around the 50 -day exponential mobile average (EMA) in 1,4320 for approximately four months, with offers trapped in a congestion trap that forces the couple to move laterally in the long -term graphics.
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.
