- The USD/CAD is maintained above 1,4300 waiting for the result of the FED monetary policy at 18:00 GMT.
- Investors will focus on the Fed points chart, since the central bank is expected to maintain stable interest rates.
- Operators are expected to reevaluate moderate BOC bets due to the hot data of the Canadian IPC in February.
The USD/CAD torque rises to about 1,4330 at European negotiation hours on Wednesday. The Loonie Paris wins as the US dollar (USD) bounces before the Federal Reserve Monetary Policy Decision (FED) at 18:00 GMT. The US dollar index (DXY) advances 0.4% to about 103.70 after revising the minimum of five months of 103.20.
According to the CME Fedwatch tool, the Fed is sure of maintaining interest rates without changes in the 4.25%-4.50%range. Therefore, investors will pay close attention to the Fed points graph and economic projections. At the December policy meeting, Fed officials collectively guided two interest rate cuts for 2025.
Investors will also focus on the press conference of the president of the FED, Jerome Powell, after the policy decision to obtain clues on the impact of Donald Trump’s policies on the economic perspective of the United States (USA). Recently, comments from several US officials, including Trump, indicated that Trump’s economic policies could lead to a short -term economic turbulence.
Meanwhile, the Canadian dollar (CAD) is expected to face pressure for tariffs imposed by the US Donald Trump has imposed a 25% tax on Canadian goods imported to the US, but has provided some extension on those products that enter the field of treaty between Mexico, the United States and Canada (T-MEC).
In the domestic front, Canadian inflation has accelerated significantly in February, forcing operators to reassess their expectations about the monetary policy perspective of the Bank of Canada (BOC). On Tuesday, Canada statistics reported that the annual consumption price index (CPI) rose at a faster rate of 2.6%, compared to the 1.9% growth observed in January.
The USD/CAD is maintained above the exponential (EMA) mobile average of 100 periods, which is around 1,4222, suggesting that the general trend is upward.
The relative force index (RSI) of 14 periods ranges in the range of 40.00-60.00, which suggests a lateral trend.
Looking ahead, an upward movement above the maximum of March 10, 1,4470 will open the door to the psychological resistance of 1,4500 and the maximum of January 30, 1,4595.
On the contrary, a downward break below the minimum of February 14, 1,4151 by the PAR would expose it to a minimum of December 9, 1,4094, followed by the minimum of December 6, 1,4020.
USD/CAD DAILY GRAPH
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.
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