The USD/CAD operates with a negative bias around 1,3800, just above the minimum of two weeks

  • The USD/CAD attracts sellers for the fourth consecutive day and seems vulnerable to a new fall.
  • An increase in crude oil prices and betting of bets to an BOC rates cut support the CAD.
  • The fiscal concerns of the US and the moderate expectations of the Fed weigh on the USD and the pair of currencies.

The USD/CAD pair fights to capitalize on the rebound last night from the region of 1,3815-1.3810, or a minimum of two weeks, and quotes with a negative bias for the fourth consecutive day on Thursday. Cash prices are negotiated around half of 1,3800 during the Asian session and seem vulnerable to extending the weekly bearish trend.

Crude oil prices recover positive traction after the back of the previous day from a maximum of almost a month due to uncertainty about nuclear conversations between the US and Iran. In addition, Canada’s underlying inflation figures higher than expected published on Tuesday decreased the hopes of a rate cut from the Canada Bank (BOC) in June, which, in turn, is considered to support the CAD linked to raw materials. This, together with the prevalent sales bias of the US dollar (USD), exerts some downward pressure on the USD/CAD torque.

Investors remain in tension after the reduction of the sovereign credit rating of the USA by Moody’s and the growing concerns about the increase in the American deficit following the wide fiscal reform of President Donald Trump. In addition, renewed commercial tensions between the US and China and the bets that the Federal Reserve (FED) will reduce the indebtedness costs in 2025 keep the USD depressed about a minimum of two weeks. This contributes even more to the offered tone that surrounds the USD/CAD torque and validates the negative perspective in the short term.

Even from a technical perspective, the recent failure near the very important simple mobile average (SMA) of 200 days and a subsequent break below the 1,3900 brand, or the lower limit of a short -term negotiation range, favor the bearish operators. This, in turn, suggests that the road of lower resistance for the USD/CAD torque remains down. Operators now expect the publication of preliminary global PMISs and US macroeconomic data for short -term opportunities.

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

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