- The USD/CAD struggles to attract buyers, although a combination of factors helps to limit the decline.
- The bearish prices of crude oil weigh on the CAD and support cash prices in the middle of a modest rebound of the USD.
- Betting for aggressive fed rates cuts should limit USD and any recovery for the currency pair.
The USD/CAD torque enters a bass consolidation phase during Thursday’s Asian session and ranges from a narrow range below 1,3800 level, near its lowest level since October 2025 reached the previous day.
The Canadian dollar (CAD) continues to be backed by the victory of the Liberal Party in the Canadian federal elections, which strengthens the position of the Mark Carney in functions in the commercial negotiations with the US with the US, however, the recent fall in crude oil prices to a minimum of almost three weeks counteracts the support factors and maintains a limit on any significant increase for the CAD linked to the CAD linked to the CAD linked to the CAD linked to the CAD linked to the CAD. This, together with a modest rebound of the US dollar (USD), acts as a tail wind for the USD/CAD torque.
According to preliminary estimates, the US economy contracted unexpectedly during the first quarter of 2025. This adds to persistent concerns about the erratic commercial policies of US President Donald Trump and increases concerns about an imminent global recession, which is expected to affect the demand for fuel. This, along with the expectations that several Opec+ members suggest an acceleration of production increases per second consecutive month in June, acts as a wind against black liquid.
Meanwhile, the discouraging data of the US GDP, together with signs of relief in inflationary pressures, reaffirms market bets due to the resumption of the Federal Reserve Rate (FED) cycle cycle in June in June. In addition, operators are currently valuing the possibility that the US Central Bank reduces financing costs at a complete percentage point for the end of the year. This could stop the USD bullies when opening aggressive bets and suggests that the lower resistance path for the USD/CAD torque remains down.
The negative perspective is reinforced by the night break through the lower limit of a short -term negotiation range maintained during the last week. In addition, the oscillators in the daily chart remain deeply in negative territory and favor bassists. Therefore, any atmosphere of Usd/CAT ascent is more likely to be sold. The operators now wait for the key macroeconomic data of the United States scheduled for the beginning of a new month, starting with the ISM manufacturing PMI on Thursday, to obtain a new impulse.
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.
