- The Canadian dollar won another 0.15% on Monday, pushing the USD/body even more down.
- A quiet presentation of Canada on the economic data agenda gives CAD the prominence in the middle of the losses of the US dollar.
- Another decision on rates of the Federal Reserve is on the way, with key Canadian inflation data scheduled by the end of this month.
The Canadian dollar (CAD) was even more strengthened at the upper end to start the new negotiation week, rising around a sixth of one percent against the weakened US dollar (USD). Market concerns in general about the acceleration of the conflict in the Middle East between Israel and Iran, who are still increasing, are still present, as well as the hopes of investors that the scenario will moderate in the coming days and weeks.
Canada will continue to be absent from the economic calendar until the key inflation figures are published at the end of the month. Despite the lack of contributions from the Canadian side, the body continues to advance towards new maximums of several months against the US dollar while the widest markets hit the USD.
Daily summary of market movements: the hopes of investors for a resolution in the Middle East keep the dollar under pressure
- The Canadian dollar is extending the short -term bundle impulse, sending to the USD/body even beyond the 1,3600 area.
- Israel began a series of reprisals with Iran last week after attacking Iranian nuclear facilities.
- The two Middle East countries have been launching missile barges for each other for four days.
- Monday’s first reports suggested that Iran was willing to discuss peace solutions, which generated hopes in the market of rapid resolution.
- Iran was quick to distance himself from the reports, with a reporter from Al Jazeera, Qatarà property, declaring that the first reports were false.
- The Federal Reserve (Fed) is scheduled to keep the fees again this week.
- President Trump is expected to continue intensifying the antagonistic rhetoric against Fed officials while Trump desperately seeks ways to lighten the growing US debt load.
Prognosis of the price of the Canadian dollar
The Canadian dollar has closed flat or gained ground against the US dollar in all but three of the last 12 consecutive negotiation sessions. The USD/CAD is constantly testing new maximums of eight months daily, and the offers are sinking into a line of descending trend drawn from maximums of several decades established in February.
Unless there are significant changes in the global position, the US dollar is on its way to continuing to lose peso against CAD. A technical setback could be incorporated into the USD/CAD graphics, but a short -term technical roof is discounted from the 1,3700 zone.
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.
