Most recent article: Canadian Dollar sees a thin but shaky recovery in rough post-NFP Friday markets
- The Canadian Dollar is lower on the day against most of its peers.
- Crude Oil prices appear to have found a floor for now, easing downside CAD pressure.
- Friday’s US NFP remains the key closer for the trading week.
The Canadian Dollar (CAD) continues to pare back recent gains, shedding weight or flattening against all of its major currency peers, losing ground across almost the entire FX major currency board, seeing a meager one-half of one percent gain against the Swiss Franc (CHF), which takes pride of place as the biggest loser of the major currencies on Thursday.
The Bank of Canada (BoC) held interest rates steady at 5% on Wednesday, in-line with market expectations and bolstering the Canadian Dollar on the day. Now that investors have had time to chew on the BoC’s statement, it seems the Canadian central bank wasn’t as hawkish as it initially appeared.
The Canadian Dollar is paring back gains on Thursday as investors readjust their CAD exposure heading into another bumper US Nonfarm Payrolls (NFP) print to close out the trading week on Friday.
Daily Digest Market Movers: Canadian Dollar softer as markets focus on US NFP ahead
- Thin data on the docket for Thursday as markets get a breather before Friday’s NFP print.
- Canadian Building Permits recovered less than markets were hoping for in October, rebounding 2.3% versus the forecast of 2.9%.
- September Building Permits declined -8.1% after getting revised down from -6.5%.
- US Initial Jobless Claims for the week ending December 1 slightly beat expectations, helping to bolster equities and risk appetite in general, limiting CAD losses.
- US Initial Jobless Claims saw 220K new jobless benefits seekers last week, slightly less than the forecasted 222K and coming in just under the 4-week average of 220.75K.
- Crude Oil markets have flattened on Thursday but remain steeply off of recent bids, providing little support for the Canadian Dollar.
- Markets to focus on Friday’s upcoming US Nonfarm Payrolls report for November, expected to climb from October’s 150K to 180K MoM.
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 | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.26% | -0.19% | 0.08% | -0.71% | -2.06% | -0.45% | 0.12% | |
| EUR | 0.25% | 0.03% | 0.32% | -0.48% | -1.81% | -0.19% | 0.37% | |
| GBP | 0.20% | -0.04% | 0.28% | -0.52% | -1.85% | -0.24% | 0.33% | |
| CAD | -0.08% | -0.31% | -0.28% | -0.80% | -2.14% | -0.52% | 0.06% | |
| AUD | 0.74% | 0.48% | 0.51% | 0.80% | -1.32% | 0.29% | 0.82% | |
| JPY | 2.02% | 1.80% | 1.83% | 2.09% | 1.30% | 1.63% | 2.15% | |
| NZD | 0.45% | 0.20% | 0.24% | 0.51% | -0.29% | -1.62% | 0.53% | |
| CHF | -0.13% | -0.38% | -0.33% | -0.05% | -0.84% | -2.19% | -0.57% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical Analysis: Canadian Dollar sees downside on Thursday, USD/CAD testing 1.3600
The USD/CAD pushed back into the 1.3600 handle during Thursday trading, and the pair is running into some resistance in the bids at the technical level. A rebound in the Loonie looks unlikely with intraday action finding support from the 200-hour Simple Moving Average (SMA) near 1.3570.
On the daily candlesticks, the USD/CAD is being pushed higher following a rejection from the 200-day SMA just above the 1.3500 handle. Near-term action sees the 50-day SMA testing 1.3700, which could draw bids higher.
A sustained bearish rejection from 1.3600 will see downside momentum gather for a run back down to 1.3500, where sellers will want to regather efforts for an attempt at breaking through the week’s low near 1.3480.
USD/CAD Hourly Chart
USD/CAD Daily Chart
Canadian Dollar FAQs
What key factors drive the Canadian Dollar?
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.
How do the decisions of the Bank of Canada impact 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.
How does the price of Oil impact the Canadian Dollar?
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.
How does inflation data impact the value of the Canadian Dollar?
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.
How does economic data influence the value of 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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