- The Canadian dollar remains strengthened about 1.38 against the US dollar.
- Investors expect a commercial confrontation between President Trump and Prime Minister Carney.
- The Fed decision is expected to maintain stable rates, but the language of those responsible for the policy will be key this week.
The Canadian dollar (CAD) remains stable against the US dollar (USD) to start the new week of operations, with the USD/CAD staying close to the 1,3800 area. Commercial tensions continue to cook over low heat between the US and Canada, and an upcoming discussion is expected between US President Donald Trump and the newly appointed Canadian Prime Minister Mark Carney generates some sparks.
The last Lot of Key Canadian employment figures will be published at the end of the week, but the key holders generators for the Canadian dollar operators will be the decision of Federal Reserve (Fed) this week. A new round of conversations focused on trade is expected after a key meeting between Prime Minister Carney and President Trump.
The Trump administration continues to intensify the combative rhetoric about ‘incorporating’ Canada in the United States in a direct attack on Canadian sovereignty. Meanwhile, Prime Minister Carney is expected to put President Trump in an awkward situation on the deteriorated commercial conditions between Canada and the USA.
What moves the market today: the Canadian dollar remains stable while investors weigh the risk factors
- The last decision of Fed rates, scheduled for Wednesday of this week, will be a key piece in the puzzle of investors despite the fact that markets generally expect another pause in rates. The rhetoric of those responsible for the FED will occupy the center of the stage while investors seek signals that the Fed will begin to pivot towards another cycle of feat cuts.
- Canadian employment figures are scheduled for Friday, but that is still far away.
- Commercial conversations are expected to intensify in the coming weeks after the widely anticipated meeting of Prime Minister Carney with the Trump administration, which is expected for Tuesday.
- A Code Northern States is also expected to meet with the Canadian Prime Minister Passy separately, which could increase tensions with the Trump administration.
- President Trump insists that “he is not sure” what Carney wants to meet him, although Carney has openly declared that the old Canada-EE.U relationship. Based on integration “is over.” According to Prime Minister Carney, “our approach will be in both immediate commercial pressures and the broader future economic and security relationship between our two sovereign nations.”
Prognosis of the price of the Canadian dollar
Despite a broad market for sale in short of the US dollar, the Canadian dollar seems to have found a new plateau, with the USD/CAD generating a new congestion pattern near the 1,3800 area. The USD/CA has backed away from the March peaks near the 1,4500 region, falling below the 200 -day exponential mobile average (EMA) about 1,4040.
A firm technical floor remains in 1,3800, however, a new outbreak of strength of the Canadian dollar could easily force the torque by entering a new bearish pattern.
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.
