- The Canadian dollar fell 0.5% on Wednesday.
- The Bank of Canada made a highly expected basic point rate cut.
- Concerns about the commercial war continue to cooine over heat.
The Canadian dollar (CAD) recovered some land on Wednesday, driven by a general relief in the US dollar market flows. The body earned approximately half a percentage point against the US dollar, pushing the USD/Cad back below the level of 1,4400.
The Bank of Canada (Boc) made another cut of fees of a quarter cord despite the general threat of a commercial war with the US that is uncontrolled, since the Central Canadian bank hastened to support the Canadian economy mismatched before a prolonged conflict over tariffs with the US president Donald Trump. The inflation figures of the US Consumer Price Index (CPI) cooled faster than expected in February, helping to relieve the general market tensions, but investors remain warm after the US imposed a 25% global tariff of the entire steel and aluminum imported to the US.
What moves the market today: markets regain balance, but commercial war fears continue to boil
- The Canadian dollar recovered around half a percentage point on Wednesday, dragging the USD/Cad back to the 1,4350 zone, a family congestion level for CAD operators.
- The US IPC inflation softened slightly in Februaryhelping to contain a resurgence of inflation concerns caused by an unexpected increase in price pressures in January.
- The Boc cut its main reference rate at 25 basic pointsup to 2.75%. More rates cuts will become more and more difficult to implement as the US trade war with all its closest commercial partners continues to intensify.
- The US president Donald Trump reminded the markets that he still has the intention of imposing another lot of tariffs In April. Another “defensive” tariff in the near future about copper is also expected.
- The next Canadian Prime Minister Mark Carneywho is scheduled to replace Prime Minister Justin Trudeau, said he is ready to talk to the US administration, but in his own terms.
Prognosis of the price of the Canadian dollar
The half -week of the Canadian dollar places the USD/CAD graph again in fear territory, since the lack of a predominant trend leaves the body exposed to continuous oscillation conditions. A demand zone between 1,4440 and 1,4480 has set a firm technical roof, while the technical support of the region below 1,4300 has established a firm ground just below the price action.
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.
