- The Canadian dollar spent Thursday virtually motionless on the charts before registering a moderate bid.
- Prices for Canadian raw materials and industrial production exceeded expectations, but the market is focused on something else.
- Fed Chairman Jerome Powell notes that policy is restrictive, but more could be needed, causing the dollar to fall.
He Canadian Dollar (CAD) is making a late break against the US Dollar (USD) as the Dollar retreats, reversing some of yesterday’s declines that saw the Loonie fall to its lowest prices against the USD since early October.
Canadian Industrial Goods Prices and Commodity Price Index numbers for September beat expectations, but the low-impact data did little to push the CAD into deeper moves, with most of the market focused in the speech of the president of the Federal Reserve (Fed), Jerome Powell, at the Economic Club of New York.
Daily summary of market movements: The Canadian dollar moves sideways, with some last-minute movements after Powell’s speech
- The Canadian dollar remains at opening prices after testing the ground in both directions.
- Canadian economic data is strictly low impact for the day, leaving traders focused on external factors.
- Fed Chair Powell’s speech sparked a spike in intraday volatility in USD-based currency pairs, but moves remain limited.
- The USD/CAD pair struggles to advance beyond 1.3700, while the CAD remains firm.
- Crude oil posted a slight rally on Thursday, providing limited support to the CAD.
- Fed Chair Powell notes that “inflation remains too high,” and the labor market remains tight but shows signs of cooling.
- The weakening USD is giving the CAD a chance to spend the day higher.
- CAD traders will be keeping an eye on Friday’s Canadian retail sales.
Technical Analysis: USD/CAD tests levels below 1.3700 after Fed appearance
USD/CAD is experiencing a late break below 1.3700 with intraday action being pushed towards the 50-hour SMA near 1.3680, with the 50% retracement level of floor-to-ceiling moves yesterday located at that price.
Momentum on the daily candlesticks continues to find support at an uptrend line originating at 1.3100, along with a bullish 50-day SMA dipping into 1.3575 and building a technical support floor to catch any bearish extension in the USD/ CAD.
The pair continues to test the limits of a descending trend line drawn from extreme 2020 highs at 1.4668, and bullish momentum could be limited going forward as the short-term uptrend crashes into long-term resistance. term.
Dollar Quote Today
The following table shows the percentage change of the US Dollar (USD) against major currencies.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.39% | -0.07% | -0.06% | -0.09% | 0.06% | 0.08% | -0.41% | |
| EUR | 0.38% | 0.31% | 0.29% | 0.32% | 0.42% | 0.43% | -0.04% | |
| GBP | 0.07% | -0.32% | 0.01% | 0.00% | 0.13% | 0.13% | -0.36% | |
| CAD | 0.09% | -0.29% | 0.00% | 0.00% | 0.16% | 0.14% | -0.36% | |
| AUD | 0.09% | -0.30% | -0.02% | 0.03% | 0.09% | 0.12% | -0.38% | |
| JPY | -0.03% | -0.46% | -0.15% | -0.12% | -0.09% | 0.00% | -0.49% | |
| NZD | -0.02% | -0.41% | -0.12% | -0.09% | -0.11% | 0.06% | -0.44% | |
| CHF | 0.46% | 0.06% | 0.35% | 0.41% | 0.37% | 0.48% | 0.50% |
The table shows the percentage changes of the major currencies against each other. The base currency is chosen in the left column, while the quote currency is chosen in the top row. For example, if you choose the euro in the left column and scroll down the horizontal line to the Japanese yen, the percentage change that appears in the box will represent EUR (base)/JPY (quote).
Frequently Asked Questions about the Canadian Dollar
What factors determine the price of the Canadian dollar?
The key factors that determine the price of the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of oil, Canada’s largest export product, the health of its economy, inflation and the trade balance, which is the difference between the value of Canadian exports and its imports. Other factors are market sentiment, that is, whether investors are betting on riskier assets (risk appetite) or looking for safe havens (risk aversion), with risk appetite being positive for the CAD. As a major trading partner, the health of the US economy is also a key factor influencing the Canadian dollar.
How do the decisions of the Bank of Canada influence the Canadian dollar?
The Bank of Canada (BoC) significantly influences the Canadian dollar by setting the level of interest rates that banks can lend to each other. This influences the level of interest rates for everyone. The BOC’s main objective is to keep inflation between 1% and 3% by adjusting interest rates up or down. Relatively higher interest rates are usually positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the first being negative for the CAD and the second being positive for the CAD.
How does the price of oil influence the Canadian dollar?
The price of oil is a key factor influencing the value of the Canadian Dollar. Oil is Canada’s largest export, 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, as aggregate demand for the currency increases. The opposite occurs if the price of Oil falls. Higher oil prices also tend to result in a higher probability of a positive trade balance, which is also support for the CAD.
How does inflation data influence the value of the Canadian Dollar?
Although inflation has traditionally always been considered a negative factor for a currency, reducing the value of money, the opposite has actually happened in modern times, with the relaxation of cross-border capital controls. Inflation tends to lead central banks to raise interest rates, which attracts more capital from international investors looking for a lucrative place to store their money. This increases the demand for the local currency, which in the case of Canada is the Canadian Dollar.
How does economic data influence the value of the Canadian dollar?
Macroeconomic data releases measure the health of the economy and can influence the Canadian dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys can influence the direction of the CAD. A strong economy is good for the Canadian dollar. Not only does it attract more foreign investment, but it may encourage the Bank of Canada to raise interest rates, resulting in a stronger currency. However, if 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.
