- The USD/CAD extends its winning streak for the third day of negotiation on Thursday, rising slightly above 1,3700.
- The possibility that the US has scaled tensions in the Middle East.
- The governor of the BOC, Tiff Macklem, hopes that the US revokes the tariffs once both nations sign a commercial agreement.
The USD/CAD pair extends its two -day recovery movement to about 1,3710 during the Asian negotiation hours on Thursday. The Loonie par attracts offers as the US dollar (USD) earns more, while tensions in the Middle East have climbed into the possibility that the United States (USA) attack on Iran, Bloomberg reported.
The demand for shelter assets, such as the US dollar, increases in the midst of the growing geopolitical tensions. At the time of publication, the dollar index (DXY), which follows the value of the dollar against six main currencies, moves up 99.10.
At the domestic sphere, the FED maintained interest rates without changes in the range of 4.25% -4.50% per fourth consecutive policy meeting and warned about the risks of stagflation due to the imposition of commercial policy by US President Donald Trump.
Meanwhile, commercial tensions between the US and Canada seem to be improving, since both agreed to reach a bilateral agreement within 30 days during the G7 summit.
On Wednesday, the governor of the Bank of Canada, TIFF Macklem, warned of the inflationary risks upward if the tariffs imposed by the US remain in force. However, I hope that additional tariffs were eliminated if both nations reached a commercial agreement.
The USD/CAD wins for three consecutive days after registering a new minimum of eight months around 1,3540 on Monday. The Loonie Par is recovered near the 20 -day exponential (EMA) mobile average, which quotes around 1,3715.
The 14 -day relative force (RSI) index returns above 40.00, suggesting that a bassist impulse is over for now. However, the bearish bias remains intact.
The asset could slide towards the psychological level of 1,3500 and the minimum of September 25, 1,3420 if it breaks below the minimum of Monday of 1,3540.
On the contrary, a recovery movement above the maximum of May 29, 1,3820 would open the door towards the maximum of May 21, 1,3920, followed by the maximum of May 15, 1.4000.
USD/CAD DAILY GRAPH
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
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.
