Market news
24.06.2024, 16:21

Canadian Dollar drifts higher on quiet Monday

  • Canadian Dollar found room up top, bolstered by floundering Greenback.
  • Canada to deliver update on CPI inflation on Tuesday.
  • Risk appetite remains subdued as markets await signs of rate cuts.

The Canadian Dollar (CAD) found some room on the high side on Monday, easing higher as the US Dollar softly receded across the board. Investors have little meaningful information to chew on to kick off the new trading week, leaving market sentiment adrift. 

Canada will deliver an update on Canadian Consumer Price Index (CPI) inflation on Tuesday. Outside of Friday’s upcoming Canadian Gross Domestic Product (GDP) print, this week's agenda includes little else, save for a Monday appearance from Bank of Canada (BoC) Governor Tiff Macklem. USD traders will also have a long wait for US Durable Goods Orders and US Personal Consumption Expenditures (PCE) Price Index, both of which are due on Friday.

Daily digest market movers: Thin Monday leaves Canadian Dollar to drift higher

  • Canadian Dollar is broadly higher on Monday, but gains remain thin. The CAD is up a third of a percent against the US Dollar, while shedding one-tenth of one percent against the Euro.
  • Canada’s Tuesday CPI print will be the key release for CAD traders this week, with Canadian GDP far off in the distance.
  • Canada’s CPI inflation is expected to tick lower to 2.6% from 2.7% for the year ended in May.
  • BoC’s own CPI core inflation metric is forecast to hold flat at 0.2% MoM.
  • Broad-market focus will be looking ahead to Friday’s US PCE Price Index inflation print as investors continue to cling to hopes for a September rate cut from the Federal Reserve (Fed).

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.

USD   -0.34% -0.32% -0.06% -0.23% -0.22% -0.11% 0.00%
EUR 0.34%   0.04% 0.34% 0.15% 0.14% 0.27% 0.41%
GBP 0.32% -0.04%   0.24% 0.11% 0.10% 0.24% 0.38%
JPY 0.06% -0.34% -0.24%   -0.17% -0.12% -0.01% 0.06%
CAD 0.23% -0.15% -0.11% 0.17%   0.03% 0.13% 0.28%
AUD 0.22% -0.14% -0.10% 0.12% -0.03%   0.13% 0.27%
NZD 0.11% -0.27% -0.24% 0.00% -0.13% -0.13%   0.13%
CHF -0.00% -0.41% -0.38% -0.06% -0.28% -0.27% -0.13%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Technical analysis: Canadian Dollar finds fresh highs against Greenback on thin Monday

The Canadian Dollar (CAD) found a bid on Monday as the US Dollar eased into the low end. The CAD is extending a recent bout of strength against the Greenback, clipping into a fresh three-week high against the USD and dragging the USD/CAD pair toward 1.3650.

USD/CAD has closed in the red for all but two of the last ten consecutive trading days and is on pace to extend into another bearish candle as bids fall below the 50-day Exponential Moving Average (EMA) at 1.3675. Long-term technical support sits at the 200-day EMA, which is rising into the 1.3600 handle.

USD/CAD hourly chart

USD/CAD daily chart

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.


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