- The Canadian dollar defeated water to summarize the trading week.
- Canadian labor and salary data were barely moved by the needle as investors focus on trade.
- The preliminary trade negotiations of US-China on the weekend will set next week's tone.
The Canadian dollar (CAD) was flattening on Friday, sticking to the US dollar (USD) almost 1.3900, as Loonie Markets struggles to find a reason to move too far in either direction. Market minds are entirely driven by the upcoming US and Chinese trade negotiations created in Switzerland this weekend.
Canada's work and salary data were mostly expected on Friday. Canada's wage growth is still uniform and the Canadian economy added a couple more jobs in April. However, the unemployment rate in Canada was slightly higher, compensating for better than expected recruitment.
Daily Digest Market Movers: Canadian dollar market is moving very little when US trade dominates
- The Canadian dollar alleviated this week against Greenback, rejecting USD/CAD over 1.3900 before they stepped out on Friday.
- Canada's average hourly rate remained steadily 3.5% until April.
- The net change in Canada on employment was beaten in April, adding Neto 7.4K new positions compared to prognosis 2.5k. However, this number still failed to reject the 32.6k of March.
- The Canadian unemployment rate also rose higher in April, rising from 6.7% to 6.9%. The average market forecasts required an increase of 6.8%.
- Next week will come: Canada's economic data will take the back seat again Focus on US inflation data.
The Canadian Dollar price forecast
This week's fresh Loonie weakness blow hit USD/CAD at the top level, confirming the multi -week consolidation period and rejecting offers over 1.3900. The couple is now moving near 1.3930, but the continued bullish momentum depends entirely on macroeconomic factors, as markets revolve around continuing trade voltages between the US and the rest of the world.
USD/CAD daily chart
Canadian dollar
Canadian dollars (CAD) leading factors are the level of interest rates in the Canadian Bank (BOC), oil price, Canada's highest export, economic health, inflation and trade balance, which is the difference between Canadian export value versus its imports. Other factors include market-state investors accept more risky assets (risk-on) or looking for safe havens (risk-field)-CAD positive. As the biggest trading partner, the US economy is also a key factor that influences Canadian dollars.
The Canadian Bank (BOC) significantly influences Canadian dollars by setting the level of interest rates that banks can borrow to each other. This affects the level of all interest rates. The main purpose of BOC is to maintain inflation of 1-3%by adjusting interest rates up or down. Relatively higher interest rates tend to be positive about CAD. The Canadian Bank can also use quantitative alleviation and tightening with the former CAD-negative and CAD-positive CAD positive.
Oil price is a key factor that affects the value of the Canadian dollar. Oil is the largest export in Canada, so oil prices tend to affect the value of CAD immediately. In general, as the price of petroleum rises, the CAD rises, the total demand of the collection is increased. If the price of oil falls, the opposite is the opposite. Higher oil prices also cause a higher positive trade balance, which also supports CAD.
If inflation was traditionally considered to be a negative factor in the currency because it lowers the value of money, the opposite has been the opposite of the relaxation of cross -border capital controls today. Higher inflation tends to set up interest rates in central banks that attract more capital inflow to global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in Canada is Canadian.
Macroeconomic data releases the health of the economy and can affect Canadian dollars. Such indicators such as GDP, production and service PMI, employment and consumer emotion studies can all affect the CAD direction. A strong economy is good for the Canadian dollar. Not only does it attract more foreign investment, it can encourage Canadian bank to put interest rates that lead to a stronger currency. If economic data is weak, CAD is likely to fall.
