- The USD/CAD ranges in a range near the lower end of a short -term operating range.
- The increase in crude oil prices benefits CAD and limits cash prices in the middle of a bassist USD.
- The increase in bets that the Fed will cut the rates several times in 2025 weighs on the dollar.
The USD/CA starts the new week with a moderate tone and oscillates in a narrow range above 1,4300 media, or the lower end of an operating range of one week, during the Asian session. Meanwhile, the fundamental background suggests that the lower resistance path for cash prices is down.
In the context of positive news that arose from the commercial conversations between the US and Canada last week, an upward in crude oil prices are observed benefiting the CAD linked to raw materials. In fact, the raw material touches a maximum of two weeks in reaction to the risk of a greater climb of tensions in the Red Sea, especially after the US promised to continue the attacks against Yemen’s hutis until their attacks cease. This, together with the underlying bearish feeling around the US dollar (USD), validates the short -term negative perspective for the USD/CAD torque.
The dollar index (DXY), which tracks the value of the dollar against a foreign exchange basket, languishes about a minimum of several months amid concerns that the tariffs of US President Donald Trump and retaliation measures of other countries could harm the US economy USA could force the Federal Reserve (FED) to cut interest rates several times this year. This keeps the USD’s bulls on the defensive and should contribute even more to limit any attempt to recover the USD/CAD torque.
The operators now expect the US economic agenda – which includes the publication of monthly retail sales and the Empire State manufacturing index – to obtain an impulse later during the US session. However, the attention will remain focused on the result of the expected two -day monetary policy meeting on Wednesday. This will play a key role in influencing the USD and providing a new directional impulse to the USD/CAD torque. Meanwhile, bassists could expect weakness below the 1,4350 support before opening new positions.
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.
