- The USD / CAD increases while investors adopt a cautious position before the FED interest rate decision.
- The Secretary in the United States of the Treasury Bessent and the commercial representative Greer should meet the Chinese Deputy Prime Minister, He Lifeng in Geneva.
- The feeling of risks improved following a joint press conference between Canadian Prime Minister Mark Carney and US President Donald Trump.
USD / CAD recovers its losses recorded during the previous session, negotiating around 1.3790 during Asian hours on Wednesday. The US dollar (USD) is gaining strength while investors adopt a cautious position before the decision of interest of the Federal Reserve (Fed) due later in the North American session.
Although the Fed should largely leave unchanged prices, the market remains on the market on the comments of President Jerome Powell, in particular in the light of current pricing uncertainties and the political pressure of the political pressure of President Trump for rate reductions.
The American secretary of the Treasury, Scott Bessent and the commercial representative, Jamieson Greer, will meet the Chinese Deputy Prime Minister, He Lifeng in Geneva this weekend, marking the first high-level dialogue, because the prices imposed by the United States intensified world trade tensions. The Chinese Ministry of Commerce has confirmed participation after having assessed American proposals and factoring in national interests, global feeling and contributions from national industry.
On the other hand, the USD / CAD pair was faced with opposite winds while the Canadian dollar (CAD) found support in the midst of an improved risk feeling after a joint press conference between Canadian Prime Minister Mark Carney and a visibly tense American president Donald Trump. Carney then organized a solo briefing, clarifying the tone of the first trade discussions in the United States.
“The talks have been constructive,” noted Carney. “President Trump and I agreed to resume discussions in the coming weeks, with a monitoring meeting at the G7. Although no decision has been made on the prices today, the two parties are determined to move forward.”
However, domestic data remain a concern for the CAD. The Ivey PMI of Canada seasonally adjusted for April fell sharply below expectations, falling to 48.0 against a 51.2 forecast, reporting a deterioration in commercial feeling.
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.
