- The Canadian dollar saw a warm action on Monday after the NFP that broke the market last week.
- Canadian markets are largely closed by a civic holiday to start the week, leaving US flows.
- Canada’s key labor data is expected later this week, which could be a turning point for the expectations of timets of BOCs.
The Canadian dollar (CAD) found a very necessary support on Monday, operating in a stable range about 1,3775 against the US dollar (USD). The global flows of the dollar were hit abruptly last week after the US non -agricultural payroll data (NFP) showed significant downward reviews, which led the US president Donald Trump to immediately fire the head of the Office of Labor Statistics (BLS).
It is expected to be a quiet week on the side of the Canadian dollar of the economic agenda. The results of the Survey of the Purchase Managers Index (PMI) of Ivey will be published on Thursday, but it is unlikely that the CAD markets move a lot. Canada’s key employment figures will be published this Friday and will serve as an indicator for the expectations of feature cuts of the Bank of Canada (BOC) as the last quarter approaches. The hiring rate in Canada is expected to slow down, and the unemployment rate is expected to increase as the Canadian economy will deal with the impacts of tariffs.
Daily summary of market movements: the Canadian dollar takes a break on Monday
- The Canadian dollar stopped on Monday, pushing the USD/CAD a mediocre pattern just below 1,3800.
- The wide disappointment in the US employment data last Friday caused an abrupt turn in the US dollar flows, breaking the six -day winning streak of the dollar against the Loonie.
- The markets will be moving restless and observing commercial holders in the middle of a general lack of high impact data on the sides of the US and Canada of the data agenda throughout the week.
- The “firm” deadline of August 1 of Donald Trump for reciprocal tariffs has become an equally firm deadline of August 8.
- The anger of President Trump before reality remains unchanged, and has promised to install a new Statistics Chief in the BLS after Donald Trump was irritated with the government data reports agency for reporting unsatisfactory employment data that eliminated most of the work profits reported in recent months.
Prognosis of the price of the Canadian dollar
The Canadian dollar had a respite driven by owners of unilateral flows of the US dollar at the end of last week, culminating in an abrupt turn in the impulse of the USD/CAD. The Loonie has cut some of the recent dollar profits, pushing the return torque below the 1,3800 area, but the USD/CAD is still trapped in a technical trap between the exponential mobile means (EMA) of 50 days and 200 days about 1,3740 and 1,3860, respectively.
USD/CAD DAILY GRAPH
Canadian dollar – frequent questions
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.
