- The USD/CAD bounces up to around 1,4105 in the first Asian session on Thursday.
- Trump announced a 90 -day pause in the highest reciprocal tariffs on US commercial partners.
- The US IPC inflation report for March will be at the Care Center later on Thursday.
The USD/CAD pair recovers part of the lost land until about 1,4105 during the first Asian session on Thursday. The US dollar (USD) advances against the Canadian dollar (CAD) due to the announcement of the US president, Donald Trump, of a 90 -day delay in reciprocal tariffs. The US consumer price inflation report (CPI) will occupy the center of the stage later on Thursday.
The president of the United States, Donald Trump, said Wednesday that he authorized a 90 -day break in new tariffs for most US business partners to 10% to allow commercial negotiations with those countries. “The 90 -day pause is an encouraging sign that negotiations with most countries have been productive,” said Nationwide Mark Hettt. “It also injects very necessary stability into a market shaken by uncertainty.
Federal Reserve officials (FED) continue to minimize the immediate impact of a possible commercial war on the US economy, preferring to emphasize the data as a key policy engine. The operators now value only 40% possibility of a Fed rates cut at the meeting next month, despite the recent market volatility, according to the CME Fedwatch tool.
The operators will take more clues of the US IPC inflation report for March later on Thursday. The general CPI is expected to show an increase of 2.6% year -on -year in March, while the underlying CPI is estimated to show a 3.0% increase during the same period.
Meanwhile, a recovery in crude oil prices could boost CAD, which is linked to raw materials. It is worth noting that Canada is the largest oil exporter to the US, and the highest prices of crude oil tend to have a positive impact on the value of the CAD.
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.
