- The Canadian dollar won a complete percentage point against the US dollar.
- The Canadian dollar reached seven months peaks against USD as commercial threats resume.
- Canadian economic data have been scarce this week, leaving the CAD follow the flows of the general market.
The Canadian dollar (CAD) received a great boost of the general weakness of the US dollar on Friday. The Canadian dollar rose more than one percentage point against the US dollar (USD) after a new batch of disturbingly relative tariff threats of the president of the United States (USA) Donald Trump.
Canadian economic data have been strictly medium -level during most of this negotiation week, leaving the Canadian dollar at the mercy of the wider feeling of investment. Next week will also begin with a remarkably scarce note: US markets will be closed for a long weekend, and there is little interest on both sides of the data calendar next week until the publication of the US Personal Consumer Expenses Price Index (PCE) of the US on Friday.
Daily summary of the market movements: the traders of the Canadian dollar take full advantage of the weakness of the dollar
- The Canadian dollar tested its highest offers against the US dollar on Friday, pushing the USD/CAD to 1,3720.
- US president Donald Trump wants to impose tariffs on individual technology companies Do not change your full business model to produce your goods in the US, even though its entire production cycle is built around margins of importation of goods from countries with lower salaries.
- President Trump also returned to ‘recommend’ a 50% tariff in all imported goods from the European Union (EU) in a repetition of identical tariff threats that Trump had already retracted in the first quarter.
- The US markets will be closed on Monday for the long weekend of the day of the fallen, restricting market flows earlier next week.
- The US PCE inflation will be the key impression next week, but the main inflation indicators still lack possible repercussions of tariffs.
Prognosis of the price of the Canadian dollar
The Canadian dollar is now testing seven months against the US dollar, pushing its best offers against the dollar since last October. The Canadian dollar hastened to fill the void left by the pressure of the weakened US dollar, sending the USD/CAD to the level of 1,3700.
The USD/CA has decreased during five consecutive negotiation sessions as the dollar sales accelerate. The torque is facing a technical rejection of the 200 -day exponential mobile average (EMA) about 1,4020, however, a too pronounced drop too fast has led the technical oscillators to overall territory, which implies that a rebound could be on its way.
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.
