- The Canadian dollar reached a maximum of 17 weeks on Thursday.
- The presentation of tariffs by the Trump administration has scared the markets.
- The dollar is suffering instead of behaving as a safe shelter as it has done in the past.
The Canadian dollar (CAD) shot 1.1% against the US dollar (USD) on Thursday, sending USD/CAD to a minimum of 17 weeks near the 1.4000 level for the first time since last December. The Canadian dollar has been supported by a US dollar that is quickly weakened, which is falling after the presentation of “Liberation Day” of the Trump administration.
In normal times, the US dollar tends to behave as a global safe refuge, with investors hurrying to accumulate dollar holdings when things seem unstable. However, these are not normal times. The US dollar is being beaten by the latest Trump administration tariffs, which are scheduled for a period of stepped but fast implementation.
What moves the market today: the Canadian dollar shoots at the collapse of the dollar
- The Canadian dollar won more than one percentage point on Thursday, reaching maximum of several months and putting the Canadian dollar on the way to close higher against the dollar for the fifth consecutive week.
- The Trump administration is ready to implement a 10% tariff in all goods imported to the US as of April 5. The “reciprocal tariffs”, which were calculated as a proportion of US imports against exports by country, will begin on April 9.
- Canada and Mexico have obtained an extension of additional tariffs, provided they are maintained within the commercial restrictions of the USMCA (formerly NAFTA). Canada has responded with its own potential tariffs If US trade falls outside its own limits of the USMCA.
- Those responsible for the monetary policy of the Federal Reserve (FED) have been working double day by warning that tariffs could be harmful to the expectations of rate cuts.
- Fed Jefferson warns that there is no hurry to change the rates
- Fed cook hopes that progress in inflation stamped behind tariffs
- The US non -agricultural payroll figures (NFP) are still planned for Friday, ready to be received by exhausted markets.
Prognosis of the price of the Canadian dollar
The Canadian dollar is prepared for its fifth consecutive weekly gain against the US dollar. The USD/CA has retreated 3.55% from its peak to its minimum from the last week of February, and the PAR is still 4.73% from the maximum of several decades at the end of January.
The last Alcista Rally of the Canadian dollar has pushed the USD/CAD to the 200 -day exponential (EMA) average about 1,4070, and the CAD bulls could be ready for another fall towards the level greater than 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 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.
