Most recent article: Canadian Dollar sees choppy gains on Friday but remains soft on week
- Canadian Dollar recovers in back half of trading week.
- Canada has wrapped up the economic calendar until next week’s GDP print.
- Crude Oil’s climb bolsters CAD, but Loonie still down on week.
The Canadian Dollar (CAD) found some bidders on Thursday even as the US Dollar Index (DXY) saw a recovery after US Gross Domestic Product (GDP) figures bolstered the broader market.
Canada wrapped up its presence on the economic calendar’s data docket this week after Wednesday’s rate statement from the Bank of Canada (BoC). Canadian Dollar traders will be waiting until Canadian GDP figures are due next Wednesday, while Canadian Purchasing Managers Index (PMI) figures are slated for next Thursday.
Daily digest market movers: Canadian Dollar rebounds despite Greenback jump on GDP beat
- US data dominated the American market session on Thursday.
- US Q4 GDP grew by 3.3% YoY, beating the forecast of 2.0% compared to the previous quarter’s 4.9%.
- US Q4 Core Personal Consumption Expenditures (PCE) held steady at 2.0%.
- US Initial Jobless Claims jumped to 214K for the week ended January 19, up from the forecast of 200K and climbed from the previous week’s 189K (revised slightly up from 187K).
- Despite a rebound on Thursday, the Canadian Dollar remains down across the board for the trading week.
- Crude Oil extends recent gains, bolsters Canadian Dollar.
- West Texas Intermediate (WTI) tested above $76.00 for the first time in 2024.
- The Bank of Canada (BoC) confirmed that the top is in for rate hikes on Wednesday but remains mum on when rate cuts could be coming.
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 | 0.37% | 0.08% | -0.39% | -0.11% | 0.11% | -0.02% | 0.50% | |
| EUR | -0.37% | -0.27% | -0.76% | -0.50% | -0.26% | -0.40% | 0.14% | |
| GBP | -0.08% | 0.28% | -0.47% | -0.21% | 0.03% | -0.12% | 0.42% | |
| CAD | 0.39% | 0.75% | 0.48% | 0.26% | 0.49% | 0.35% | 0.89% | |
| AUD | 0.13% | 0.48% | 0.20% | -0.28% | 0.22% | 0.09% | 0.61% | |
| JPY | -0.10% | 0.26% | -0.02% | -0.50% | -0.23% | -0.13% | 0.39% | |
| NZD | 0.06% | 0.39% | 0.11% | -0.37% | -0.09% | 0.14% | 0.52% | |
| CHF | -0.51% | -0.14% | -0.42% | -0.90% | -0.62% | -0.39% | -0.53% |
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 finds some space against Greenback but remains down overall
The Canadian Dollar (CAD) is broadly higher on Thursday, finding some room in the green on the back of rising Crude Oil markets. The CAD is up around nine-tenths of a percent against the Swiss Franc (CHF), the market’s single worst-performing currency on Thursday. The Loonie gained three-quarters of a percent against the Euro (EUR) and nearly half of a percent against the Pound Sterling (GBP) and the Japanese Yen (JPY).
The Canadian Dollar kicked off Thursday’s trading session by testing 1.3530 against the US Dollar (USD) before catching a ride and sending the USD/CAD back into the 1.3500 handle.
The USD/CAD is getting dragged into a technical congestion pattern on the daily candles as the 50-day and 200-day Simple Moving Averages (SMA) consolidate near 1.3500.
The pair is still up around 2.5% from December’s low of 1.3177, but it will take significant bidding pressure to force the pair into the high side of the bearish crossover of the 50-day and 200-day SMAs.
USD/CAD Hourly Charts
USD/CAD Daily Charts
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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