- The Canadian dollar remained warm against the US dollar on Tuesday.
- The beginnings of housing in Canada increased in December, but the impact of the data is low.
- The markets ignore the tariff diatribe of President Trump.
The Canadian dollar (CAD) continues to be maintained within its medium -term technical range against the US dollar (USD), keeping the USD/CAD par near 1,4300 after a firm recovery from minimum of several decades last week. Canada’s economic data are scarce and low level this week, and the market is taking the last commercial rhetoric of the US president, Donald Trump, calmly, since a complete withdrawal is expected once more.
Canada saw a firm rebound in construction permits issued in December, reversing a previous cyclical contraction. However, the data is too late to be significant, providing only a slight support for the CAD. The last threat of President Trump to impose a 25% flat tariff on all the steel and aluminum imported to the US has postponed until March 12, which leads markets to believe that this is only the next iteration of empty threats that will result in more holders than in real actions on US commercial policies.
What moves the market today: the Canadian dollar remains stable, markets ignore the tariff talk
- The Canadian dollar quoted within a tenth of one percent of Tuesday’s opening offers against the US dollar.
- Construction permits in Canada were recovered at 11.0% in December, from the revised contraction of -5.6% in November.
- Investors waiting for signs of impending rates cuts were probably disappointed by the testimony of the president of the Federal Reserve (Fed), Jerome Powell, before the US Senate Banking Committee.
- Live testimony of Jerome Powell: it is not the competence of the Fed to comment on tariff policy
- President Trump signed executive orders that impose 25% tariffs on steel and aluminum imports as of March 12, but investors expect another last minute turn by the Trump administration.
- In less than 24 hours, President Trump’s last tariff issuance has gone from having no exemptions or exclusions to include possible exemptions for Australia and China.
- Global markets will be attentive to the publication of the US Consumer Price Index (CPI) on Wednesday, which is expected to show that inflation in the US is maintained about 2.9% year -on -year.
Construction permits in Canada
Prognosis of the price of the Canadian dollar
The Canadian dollar (CAD) remains buried in a consolidation against the US dollar. The CAD briefly fell to its lowest point in two decades against the US dollar last week, sending its highest offers to USD/CAD since 2002, but a withdrawal of the tariff threats of President Trump last week paralyzed any possibility of A significant change in the dynamics of the pair.
The short -term price action remains hindered in the 50 -day exponential mobile average (EMA) near the 1,4300 zone. The markets are waiting for a reason to risk betting on the impulse in any direction, although the CAD uprisers will have an eye in the 200 -day EMA that moves around 1.4000.
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 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 the confidence of the markets, 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.
