- The Canadian dollar recovered 0.25% against the US dollar on Tuesday.
- The feeling of the market has retired from the offers in USD after a strong start of the week.
- The US IPC inflation was reduced to a minimum of three years, but the markets prepare for the repercussions of tariffs.
The Canadian dollar received a slight offer on Tuesday, thanks in large part to a general relief in the US dollar offers throughout the widest market, instead of any particular upward trend in the book for the CAD. The US Consumer Price Index (CPI) numbers were the key data of the day, and investors begin to be increasingly anxious about how the next report will be configured as Trump administration tariffs begin to be reflected in the data.
With strictly low -level data in the offer, the Canadian dollar is completely at the mercy of market feeling flows this week. The end of the temporal relief of the “reciprocal tariffs” of the US also looms on the horizon, and the firm details of a possible commercial agreement that would otherwise avoid high import taxes on Canadian goods destined for US to the US.
What moves the market today: the Canadian dollar advances in the midst of the weakness of the dollar
- The Canadian dollar rose a quarter of one percent against the US dollar on Tuesday.
- The USD/CAD has been forced to retreat below the level of 1,3950 as a result, registering a technical error of the 200 -day exponential mobile average (EMA) about 1,4030.
- The US IPC inflation was reduced more than expected in April, however, experts warn that this could be the end of progress in inflation eradication, since the effects of tariffs will begin to be reflected in the main data as of May.
- The chief economist of Moody’s about the future of inflation in the US:
- “It seemed that we could declare almost the victory in putting the inflation back in the bottle, and it is already out.
- Despite an optimistic general position in global markets, market experts are pivoting towards an increasingly bearish perspective for the future. According to Fitch Ratings:
- “In the absence of a lasting agreement, the uncertainty about where tariff fees and the impact of those already implemented will continue to be key factors in our macroeconomic forecasts. It does not mean that the agreement between the US and China means that the commercial war, which is already having a tangible economic impact, has ended.”
- The inflation data of the US Producer Price Index (IPP) and the consumer’s feeling index of the University of Michigan are scheduled for the second half of the negotiation week.
Prognosis of the price of the Canadian dollar
The cautiously bullish passage of the Canadian dollar on Tuesday pushed the USD/CAD back to the low side, breaking a loss of four days and moving away from the 200 -day Ema. The price action is ready for a possible bearish extension with technical oscillators rotating down from overcompra territory. Even so, news risks remain high for operators trying to define a short -term trend.
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.
