Canadian Dollar loses ground on quiet Monday
|- The Canadian Dollar eased against key counter-currencies to start the new week.
- Canada is sparsely represented on the economic calendar this week.
- Mid-tier Canadian data leaves the CAD at the mercy of key central bank appearances.
The Canadian Dollar (CAD) softened on Monday, falling behind an uptick in the Greenback as investors jostle for position ahead of the Federal Reserve’s (Fed) upcoming rate call later in the week. The CAD is under-represented on the economic calendar this week, and a hefty batch of central bank appearances through the midweek will leave the Canadian Dollar at the mercy of broader market flows.
With a lean economic data docket on the cards, CAD traders will be looking ahead to Wednesday’s Canadian Gross Domestic Product (GDP) for the month of May, expected to ease to 0.1% MoM from April’s 0.3% as Canada’s economy continues to slow. S&P Global Canadian Manufacturing Purchasing Managers Index (PMI) figures for June are slated for Thursday, which have consistently printed in contraction territory below 50.0 since May of 2023.
Daily digest market movers: Canadian Dollar takes a backseat to central bank expectations
- The Canadian Dollar is on pace to shed weight against the US Dollar for a ninth consecutive session, and has declined against the Greenback for all but one of the last 13 straight trading days.
- After the Bank of Canada (BoC) delivered another quarter-point rate trim last week, CAD traders are immediately pivoting to focus on the odds of yet another rate cut from the BoC in September, with odds currently priced in at roughly even.
- The US Federal Reserve will be the market mover this week as markets clamor for a 25-basis-point rate cut in the near future.
- The Fed is fully priced in as a hold on rates this week, but traders will be looking for verbal cues from Fed Chairman Jerome Powell regarding September’s rate call.
- According to the CME’s FedWatch Tool, rate traders have fully priced in 100% odds of at least a quarter-point cut when the Federal Open Market Committee gathers on September 18.
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 Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.15% | 0.18% | 0.18% | 0.16% | 0.37% | 0.29% | |
| EUR | -0.37% | -0.26% | -0.18% | -0.17% | -0.17% | -0.02% | -0.06% | |
| GBP | -0.15% | 0.26% | 0.04% | 0.05% | 0.09% | 0.25% | 0.19% | |
| JPY | -0.18% | 0.18% | -0.04% | -0.03% | 0.00% | 0.19% | 0.14% | |
| CAD | -0.18% | 0.17% | -0.05% | 0.03% | 0.02% | 0.17% | 0.13% | |
| AUD | -0.16% | 0.17% | -0.09% | -0.00% | -0.02% | 0.18% | 0.10% | |
| NZD | -0.37% | 0.02% | -0.25% | -0.19% | -0.17% | -0.18% | -0.06% | |
| CHF | -0.29% | 0.06% | -0.19% | -0.14% | -0.13% | -0.10% | 0.06% |
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: Another day, another green candle for USD/CAD
The Canadian Dollar (CAD) gave a lopsided performance on Monday as traders look elsewhere for inspiration. The CAD fell back roughly one-fifth of one percent against the Greenback, while backsliding one-third of one percent against the recovering Japanese Yen. Gains remain thin, with the CAD rising a scant one-sixth of one percent against the Euro and the New Zealand Dollar.
USD/CAD continues to march up the charts, chalking in a ninth straight gain as the Canadian Dollar slides against the Greenback. The pair has risen 2% since hitting a near-term low of 1.3589, sparking a rally after a technical rejection from the 200-day Exponential Moving Average (EMA).
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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