- The Canadian dollar advanced against the US dollar on Friday.
- The Bank of Canada is ready to make another rate cut next week.
- The weakness in the dollar index drives the CAD more than the CAD itself.
The Canadian dollar (CAD) won around a quarter percentage point against the dollar on Friday, testing higher levels but still firmly rooted in a consolidation pattern that began in mid -December. The US dollar is weakening in all areas to close a week of trade to a large extent without incident, instead of the Loonie finding some intrinsic supply pressure, which implies that it is unlikely that the bullish impulse is maintained.
The Canada Bank (Boc) is ready to make another rate cut of a quarter cord next week, while it is generally anticipated that the Federal Reserve (Fed) will maintain interest rates without changes during the first half of the year . With the USD/CAD interest rate differential to expand even more, it is unlike Next Wednesday.
Daily market summary: the body gains ground due to the increase in risk feeling
- The CAD rose about a quarter percentage point against the dollar.
- Loonie profits come from the decrease in market demand by the USD instead of any intrinsic fortress.
- The Boc cuts the interest rates at 25 basic points next week is expected.
- The Fed, which will be pronounced only a few hours later, is expected to keep the rates without changes.
- Little more importance is on the economic agenda for the Loonie next week.
Prognosis of the price of the Canadian dollar
The USD/CAD consolidation phase continues to move laterally while the Loonie operators fight to push in any direction decisively. The price action remains limited around the 1,4400 zone, although the CAD frequently proves new minimums of several years.
The last upward phase of the pair has really run out of fuel as the 50 -day exponential mobile average rises to 1,4250, but the signs of a technical change remain absent. Short -term offers remain limited by a technical floor set in the 1,4300 zone.
USD/Daily graphic CAD
Canadian dollar faqs
The key factors that determine the contribution of the Canadian dollar (CAD) are the level of interest rates set by the Canada Bank (BOC), the price of oil, the main export product of Canada, the health of its economy, Inflation and trade balance, which is the difference between the value of Canadian exports and that of their 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.