- The Canadian Dollar gained ground against the US Dollar, but fell elsewhere.
- Canada set to deliver the latest round of CPI inflation figures on Tuesday.
- Jackson Hole looms large later in the week.
The Canadian Dollar (CAD) broadly shed weight on Monday, declining across the board except for a firm performance against the US Dollar, rising one-third of one percent against the softening Greenback. Market flows into and out of the CAD remain subdued as investors buckle down for the long wait to the Jackson Hole Economic Symposium set to kick off later this week.
Canada’s latest inflation print is due on Tuesday, with headline Consumer Price Index (CPI) inflation forecast to tick lower in July, while core CPI is expected to accelerate in a price growth bump after contracting the previous month. The Bank of Canada’s (BoC) own core CPI inflation tracker last printed 1.9% YoY in June.
Daily digest market movers: Canadian CPI approaches as Fed watch continues to grind away
- Markets are broadly looking ahead to this week’s kick-off of the Jackson Hole Economic Symposium, where rate-cut-hungry investors will be hanging on every word from Federal Reserve (Fed) policymakers.
- Recent bets of a double cut in September have eased significantly after reaching a peak of 70% two weeks ago. According to the CME’s FedWatch Tool, rate markets are pricing in a scant one-in-five chance of a 50 bps cut on September 18.
- Overall, markets still have a 25 bps cut in September fully priced in, with three or four quarter-point cuts expected by the end of the year.
- Canadian Consumer Price Index (CPI) inflation forecast to tick down to 2.5% from 2.7% for the month of July
- Canadian Core CPI is expected to accelerate to 0.3% MoM from the previous month’s -0.1% contraction.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.35% | -0.72% | -0.36% | -0.93% | -1.11% | -0.32% | |
| EUR | 0.53% | 0.11% | -0.15% | 0.17% | -0.49% | -0.73% | 0.18% | |
| GBP | 0.35% | -0.11% | -0.42% | 0.03% | -0.61% | -0.77% | 0.07% | |
| JPY | 0.72% | 0.15% | 0.42% | 0.29% | -0.24% | -0.24% | 0.27% | |
| CAD | 0.36% | -0.17% | -0.03% | -0.29% | -0.59% | -0.65% | 0.00% | |
| AUD | 0.93% | 0.49% | 0.61% | 0.24% | 0.59% | -0.08% | 0.67% | |
| NZD | 1.11% | 0.73% | 0.77% | 0.24% | 0.65% | 0.08% | 0.79% | |
| CHF | 0.32% | -0.18% | -0.07% | -0.27% | -0.00% | -0.67% | -0.79% |
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).
Canadian Dollar price forecast: USD/CAD crashes into 200-day EMA, set to run out of gas
The Canadian Dollar gained one-third of one percent against the Greenback on Monday, but broadly fell across the rest of the major currency board to kick off the new trading week. USD/CAD added further bearish fuel to the fire, extending a downside plunge below the 1.3700 handle.
Daily candlesticks are set to run aground of the 200-day Exponential Moving Average (EMA) near 1.3640, and CAD bidders are likely to run out of gas before price action can ease all the way down to 1.3600.
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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