- The Canadian Dollar is softly reversing course after meager Monday gains.
- Canada Ivey PMI missed expectations but is still positive for now.
- Loonie losses capped by firming Crude Oil bids to start the week.
The Canadian Dollar (CAD) is giving back some of Friday’s gains after kicking off the trading week with a minor downstep into 1.3629 against the US Dollar (USD), and the Loonie heads into a data-light trading week.
Canada Ivey Purchasing Manager Index (PMI) figures missed the mark on Monday, but they still remain in growth territory above 50.0 for the time being.
Daily Digest Market Movers: Canadian Dollar softens, but momentum remains limited
- Canada Ivey PMI for October (non-seasonally-adjusted) came in at 51.9 compared to 54.2 in September.
- The seasonally-adjusted October Ivey PMI printed firmer at 53.4, gaining on the previous month’s 53.1 but missing the median market forecast of 54.0.
- The Canadian Dollar rose to a 12-day high of 1.3629 against the US Dollar to cap off last week’s three-day bull rally.
- The USD/CAD is seeing a relief pullback, and the CAD saw a knockback into 1.3685.
- This week’s economic calendar for the CAD has limited data of a significant nature.
- Tuesday: low-impact Canadian Trade Balance for September, mid-tier speech from the Bank of Canada’s (BoC) Deputy Governor Sharon Kozicki.
- Wednesday: Canada Building Permits (September).
- Crude Oil is seeing a minor uptick for Monday, with West Texas Intermediate (WTI) Crude Oil rising from the week’s opening bid of $80.65 to tap $82.00 per barrel.
Technical Analysis: Canadian Dollar sees relief pullback after gaining nearly 2% last week
The Canadian Dollar (CAD) is giving back some of the Loonie’s 2% rally from last week’s high of 1.3899 in the USD/CAD, and the CAD is now giving back some chart space to the Greenback.
The USD/CAD pair is trading back toward 1.3700 after seeing a clean early Monday bounce from the 50-day Simple Moving Average (SMA) currently parked near 1.3630. Near-term support from the 200-day SMA sits near the 1.3500 handle, capping off any extended bull runs in the Loonie.
US Dollar bulls will have eyes on last week’s high that landed just shy of claiming the 1.3900 handle, and a broad-market firming up of USD bidding will see the USD/CAD clawing back chart paper.
USD/CAD Daily Chart
Canadian Dollar price this month
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this month. Canadian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -1.33% | -1.58% | -1.30% | -2.35% | -0.85% | -2.67% | -1.18% | |
| EUR | 1.30% | -0.25% | 0.05% | -1.03% | 0.47% | -1.34% | 0.14% | |
| GBP | 1.55% | 0.25% | 0.30% | -0.77% | 0.71% | -1.09% | 0.40% | |
| CAD | 1.28% | -0.07% | -0.27% | -1.07% | 0.44% | -1.36% | 0.11% | |
| AUD | 2.31% | 0.98% | 0.77% | 1.03% | 1.46% | -0.31% | 1.15% | |
| JPY | 0.84% | -0.50% | -0.74% | -0.41% | -1.50% | -1.82% | -0.29% | |
| NZD | 2.61% | 1.31% | 1.06% | 1.35% | 0.32% | 1.77% | 1.46% | |
| CHF | 1.17% | -0.14% | -0.39% | -0.11% | -1.20% | 0.31% | -1.47% |
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).
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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