- The USD / CAD approaches 1,3,900 while the Canadian dollar softens before key risk events.
- American pricing tensions – Canada persist, markets ensuring trade -related signals.
- The pair of Loonie is higher, awaiting the BOC risks review and the announcement of Trump's US-UK trade agreement.
The Canadian dollar (CAD) weakens the US dollar (USD) on Thursday while investors are preparing for a pivot day of policy and commercial titles that could redefine the feeling of the North American market.
At the time of writing the editorial staff, the USD / CAD is negotiated at 1.3880, up 0.34% during the day, the reinforcement of the pair, the markets await the Bank of Canada (BOC) Review (FSR) and a speech by the American president Donald Trump, which should unveil a new British-US trade agreement, both scheduled for 2:00 p.m. GMT.
Risk revision of the Bank of Canada under the spotlight because the markets assess financial vulnerabilities
The BOC financial system review, published twice a year, offers a detailed assessment of systemic vulnerabilities within Canada's financial infrastructure.
Although it is not a monetary policy document, the FSR is relevant to market players by highlighting the risks of financial stability, including household debt, credit conditions and exposure to the housing market, which could influence the future or regulatory responses. Canada’s economy is faced with slowing growth and moderating inflation, any indication of the tightening of financial conditions or exposure to external risks could weigh on the Canadian dollar.
BOC Governor Tiff Macklem is organizing a press conference to discuss the content of the CSR results after the press release, with markets, looking closely with any signal relevant by politics.
The American trade agreement and the repercussions of the Carney meeting in North American trade policy
Simultaneously, President Trump should announce the completion of a new US-UK trade agreement, the first after the “Liberation Day”.
The markets are considering the terms of this agreement for broader implications, in particular if it establishes a precedent for bilateral arrangements which bypass traditional multilateral frameworks.
The agreement can also open the door to secondary trade alignments which benefit the currencies linked to basic products such as the Canadian dollar, especially if it improves transatlantic logistics and the demand for North American intermediate goods.
Twin political developments follow increased political friction earlier this week after Canadian Prime Minister Mark Carney met President Trump at the Oval Office on Tuesday. Although the meeting was described as “cordial but firm”, Carney rejected Trump's remarks that Canada could “become the 51st state”, declaring: “Canada is not for sale, it will never be for sale”.
Despite the tension, the two leaders discussed the future of the US-Mexico-Canada (USMCA) and commercial terms affecting the North American supply chain. Trump reiterated that the non-compliance of the USMCA provisions “would not remain unanswered”, suggesting possible examinations on sectoral prices.
USD / CAD recovers from support with beach prejudices before key catalysts
The USD / CAD edges higher on Thursday, recovering above the 10-day single mobile average (SMA), currently at 1.3832. At the same time, the wider structure of the pair remains capped under a key psychological resistance area at 1,3900–1.3944. This strip of resistance includes a round level and the retracement of Fibonacci at 61.8% of the rally from September to February and limited the upward eruptions throughout May.
Daily graphic USD / CAD
The pair remains above the November hollow at 1.3823, which has provided a firm floor in recent days. A daily fence below this level would expose deeper support for Fibonacci of 78.6% almost 1.3713.
Uplining, sustained resistance greater than 1.3944 could trigger renewed purchase pressure to the 200 -day mobile average at 1.4017, with a potentially rupture opening the way to the April summit at 1.4415.
The relative resistance index (RSI) increased up to 45.59 in the daily graph, indicating the downward discoloration but lacking in a clear directional bias when it closes on the midline at 50.
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.
