- The USD / Cad attracts fresh sellers on Thursday and undergoes pressure by a combination of factors.
- The USD bulls remain on the defensive despite the feet of the Fed on Wednesday.
- Purchases renewed around oil prices underpin the Huard and weigh on the pair of currencies.
The USD / CAD pair fails to capitalize on the modest of re -recovery of the permeable day of the neighborhood of the bottom of the year and meets a new supply during the Asian session on Thursday. However, the cash prices remain confined to a range of several weeks and are currently negotiated around the region of 1.3815, down 0.15% for the day.
The US Dollar (USD) continues its struggle for any significant buyer in the middle of increased economic uncertainty led by the rapid changing position of US President Donald Trump on trade policies. In fact, Trump said that he was not really in a hurry to sign agreements and added that he was not open to the reduction of 145% prices imposed on China to encourage commercial negotiations. This, to a greater extent, eclipses the feature break from the Federal Reserve (Fed) on Wednesday, which maintains the USD bulls on the defensive and weighs on the USD / CAD pair.
Meanwhile, crude oil prices resume a positive traction after the withdrawal of the day after a week after day and underlie the huard linked to basic products. Apart from that, the hopes of a new trade agreement in the United States have benefited the Canadian dollar (CAD) and exert some pressure on the USD / CAD pair. However, OPEC +'s decision to accelerate production increases stodic fears of the excess offer. This, as well as the concerns of demand on the back of the hopes of discoloration for rapid resolution for the American-Chinese trade war, should cap any significant advantage for crude oil prices.
This, in turn, makes it prudent to wait for a strong follow -up sale before confirming a new ventilation for the USD / CAD pair and positioning for an extension of the recent net slide of more than two decades affected in February. Merchants are now impatiently awaiting the publication of the US Weekly, data on unemployment in the United States for a momentum later at the start of the North American session. Apart from that, the oil price dynamics should contribute to the production of short -term negotiation possibilities before Canadian job report on Friday.
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.
