- The USD/CAD rises while investors adopt a cautious posture before the Fed interest rate decision.
- The US Treasury Secretary, Scott Besent, and Commerce Representative Jamieson Greer, will meet with the vice -first Chinese minister He Lifeng in Geneva.
- The feeling of risk improved after a joint press conference between Canadian Prime Minister Mark Carney and US President Donald Trump.
The USD/CAD is recovering the losses recorded in the previous session, quoting around 1,3790 during Wednesday’s Asian hours. The US dollar (USD) is gaining strength while investors adopt a cautious posture before the Federal Reserve Interest Decision (Fed) that will occur later in the North American session.
Although the Fed is expected to maintain the rates without changes, the market approach remains in the comments of President Jerome Powell, particularly in the light of the ongoing tariff uncertainties and the growing political pressure of President Trump for feat cuts.
The US Treasury Secretary, Scott Besent, and the trade representative, Jamieson Greer, will meet with the viceprimer Chinese minister He LIFENG in Geneva this weekend, marking the first high -level dialogue since the tariffs imposed by the US intensified global commercial tensions. The China Ministry of Commerce confirmed its participation after evaluating US proposals and taking into account national interests, global feeling and the opinion of the national industry.
On the other hand, the USD/CAD pair faced winds against while the Canadian dollar (CAD) found support in the midst of an improved risk feeling after a joint press conference between Canadian Prime Minister Mark Carney and a visibly tense president of the US, Donald Trump. Carney then made a solo press conference, clarifying the tone of the initial commercial discussions between the US and Canada.
“The conversations were constructive,” said Carney. “President Trump and I agreed to resume discussions in the coming weeks, with a follow -up meeting at the G7. Although no tariff decisions were made today, both parties are committed to advance.”
However, internal data remains a concern for CAD. The PMI Ivey seasonally adjusted from Canada for April fell dramatically below expectations, going down to 48.0 in front of a prognosis of 51.2, pointing out a deterioration in the business feeling.
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.
