- The Canadian dollar dropped 0.66% against the greenback Thursday.
- The feeling of the market has largely strengthened the US dollar while investors hope for progress in commercial transactions.
- Prices are still the frontal concern for merchants, clinging to the announcement of the US-UK Trade Deal.
The Canadian dollar (CAD) struck a flexible patch on Thursday, extending in a second consecutive day of losses while the US dollar (USD) catches a wide offer in the hope that the Trump administration will accelerate the pace of trade agreements to overthrow its own self-imposed commercial prices. Details remain thin and nothing has been formalized, but the announcement of an in progress trade agreement between the United States (United States) and the United Kingdom (United Kingdom) has strengthened the feeling of the markets, stimulating the greenback at all levels.
Trade tensions remain high between Canada and the United States, and it seems unlikely that a rapid pivot on prices between the two countries occurs rapidly. The United States is incredibly dependent on key imports from Canada, including assembled cars, motor vehicle parts, light muddy light oil from Alberta and critical crop fertilizers. 90% of potash supplies from the United States are imported because the country is unable to produce enough to meet its internal demand.
Daily Digest Market Movers: The Canadian dollar fell back in generalized market hopes for commercial transactions
- The Loonie dropped two -thirds of one percent against the US dollar on Thursday, sending the USD / CAD to a summit of several weeks almost 1.3930.
- The USD / CAD won 1.23% at the bottom of the top over two days while the feeling of the market put the greenback in place.
- Nothing has been signed or formalized, and key details remain light, but the Trump administration rushed over itself to announce a trade agreement in progress with the United Kingdom (United Kingdom) on Thursday, playing on the market in the hope that President Trump will find a way to avoid his own self-imposed prices.
- The period of grace on “reciprocal prices” was exhausted on June 9.
- Despite an imminent trade agreement, almost all goods imported into the United States from the United Kingdom will always be subject to 10%prices, and President Trump quickly warned that it is unlikely that other countries will get such a good “agreement” in future commercial negotiations. This gives other countries little reason to continue to approach the negotiation table.
- The prices are fully exempt from the key goods of the United Kingdom, such as refined ethanol, which the United States has not imported from the United Kingdom for more than 15 years.
Canadian dollar price forecasts
A decrease of two days for the Canadian dollar, driven largely by a resumption of the base in the greenback auction, pushed the USD / Caded over the handle of 1,3,900 for the first time since early April. The US dollar was seriously beaten at all levels after the Trump administration has announced unbalanced “reciprocal” prices in all its business partners, but the USD / CAD was faced in an approximate technical floor near the region of 1,3800.
A continuous technical recovery in USD / CAD is still faced with significant opposite winds: the 200-day exponential moving average floats above almost 1.4030. The 50 -day EMA is about to form a lower cross, which could report more in the long term.
Daily graphic USD / CAD
Canadian dollar FAQ
The key factors at the origin of the Canadian dollar (CAD) are the level of interest rate set by the Bank of Canada (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and trade balance, which is the difference between the value of exports of Canada compared to its imports. Other factors include the feeling of the market – that investors have more risky assets (risk) or are looking for safety havens (risk) – with the risk for the positive CAD. As the most important trading partner, the health of the American economy is also a key factor influencing the Canadian dollar.
The Bank of Canada (BOC) has a significant influence on the Canadian dollar by fixing the level of interest rate that banks can lend each other. This influences the level of interest rate for everyone. The main objective of the BOC is to maintain inflation to 1 to 3% by adjusting increased or declining interest rates. Relatively higher interest rates tend to be positive for CAD. The Bank of Canada can also use a quantitative softening and tightening to influence credit conditions, with the old cad-negative and the last positive frame.
The price of oil is a key factor with an impact on 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 CAD value. Generally, if the price of oil increases, the CAD also increases, because the overall demand for money increases. The reverse is the case if the price of oil decreases. The higher oil prices also tend to lead to a greater probability of a positive trade balance, which also supports CAD.
Although inflation has always been considered a negative factor for a currency because it reduces the value of money, the reverse was in fact the case in modern times with the relaxation of cross -border capital controls. A higher inflation tends to lead central banks to set up interest rates that attract more capital entries from global investors looking for a lucrative place to keep their money. This increases demand for local currency, which in the case of Canada is the Canadian dollar.
Macroeconomic data versions assess the health of the economy and may have an impact on the Canadian dollar. Indicators such as GDP, Manufacturing and PMIS services, employment and surveys on consumer feelings can all influence CAD management. A strong saving is good for the Canadian dollar. Not only does it attract more foreign investment, but it can encourage the Bank of Canada to install interest rates, which leads to a stronger currency. If the economic data is low, however, CAD is likely to decrease.
