.jpg)
- The Canadian dollar is trading tightly during the mid-week market session.
- Canada fell to strictly average data releases for the rest of the week.
- The summary of the Bank of Canada’s deliberations is unlikely to offer anything new.
The Canadian Dollar (CAD) is in the waters on Wednesday, trading within a tenth of a percent against its largest counterpart – the US Dollar (USD). US markets are closed for the mid-week holiday in June, reducing market trading volumes as investors look forward to the release of key data on Friday.
Canada only has mid-level data releases on the docket for the remainder of the trading week. Canadian dollar traders will be watching the latest trading summary from the Bank of Canada (BoC) on Wednesday, but no major revelation is expected. With US markets closed for the holiday, trading volumes are thin and investors will be back in the fold in force to hunker down and wait for the US Purchasing Managers’ Index (PMI) to be printed on Friday.
Daily Summary of Market Movers: Canadian Dollar Trading in the Water on Quiet Wednesday
- The Canadian dollar has been on a slow grind this week, finding minimal gains against the US dollar. From this week’s opening quotes, the Canadian dollar rose five percent against the US dollar.
- The summary of the Bank of Canada’s deliberations, scheduled to be released in the middle of Wednesday’s US session, is not expected to provide any new details of the Bank of Canada’s policy stance.
- Risk appetite remains firmly on balance, as investors shrug off a wave of dovish talking points from Federal Reserve officials this week. Policymakers still want to see more signs of slowing US inflation before committing to even discussing interest rate cuts.
- Interest rate markets remain firmly committed to hopes of a rate cut in September. According to the Chicago Mercantile Exchange’s FedWatch tool, traders are pricing in a roughly 70% chance of at least a quarter-point rate cut from the Federal Open Market Committee (FOMC) at its September 18 meeting.
- Ahead of the US PMI release on Friday, Thursday will provide a weekly update on US initial jobless claims, a popular indicator of near-term economic performance.
Canadian dollar price today
The table below shows the percentage change in the Canadian Dollar (CAD) against the major currencies listed today. The Canadian dollar was the strongest against the New Zealand dollar.
| American dollar | euro | GBP | JPY | Bastard – scoundrel | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| American dollar | -0.07% | -0.09% | 0.06% | -0.04% | -0.23% | 0.20% | -0.01% | |
| euro | 0.07% | -0.03% | 0.14% | 0.02% | -0.15% | 0.28% | 0.06% | |
| GBP | 0.09% | 0.03% | 0.16% | 0.05% | -0.13% | 0.31% | 0.10% | |
| JPY | -0.06% | -0.14% | -0.16% | -0.10% | -0.28% | 0.15% | -0.05% | |
| Bastard – scoundrel | 0.04% | -0.02% | -0.05% | 0.10% | -0.18% | 0.25% | 0.05% | |
| Australian dollar | 0.23% | 0.15% | 0.13% | 0.28% | 0.18% | 0.44% | 0.24% | |
| New Zealand dollar | -0.20% | -0.28% | -0.31% | -0.15% | -0.25% | -0.44% | -0.21% | |
| Swiss franc | 0.01% | -0.06% | -0.10% | 0.05% | -0.05% | -0.24% | 0.21% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select 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: CAD consolidates on Wednesday, USD/CAD finds a floor at 1.3700
The Canadian Dollar (CAD) is trading weakly on Wednesday, remaining near a flat level against the US Dollar and remaining stuck within five percent across the major currency board. US Dollar/Canadian Dollar The pair pulled back to the 1.3700 level before finding a floor in the mid-week market session, but the pair is trading on the low side of the average bid at the 200 hourly exponential moving average (EMA) near 1.3725.
Despite the lack of near-term momentum, the Canadian dollar is slowly making small gains against the US dollar. The USD/CAD pair has closed flat or lower for all but one of the last seven straight trading days, and on Wednesday is moving solidly towards eighth place. The pair is still holding at the high level of the 50-day moving average at 1.3675 and remains trapped in the bullish zone above the 200-day moving average at 1.3578.
USD/CAD hourly chart
Daily chart of the USD/CAD pair
Frequently asked questions about the Canadian dollar
The main factors that move 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 moving into riskier assets (risk on) or looking for safe havens (risk off) – with risk being positive for the Canadian dollar. As its largest trading partner, the health of the US economy is also a major factor affecting the Canadian dollar.
The Bank of Canada (BoC) has significant influence on the Canadian dollar by setting the level of interest rates that banks can lend to each other. This affects the level of interest rates for everyone. The Bank of Canada’s main goal is to keep inflation at 1-3% by adjusting interest rates up or down. Relatively high interest rates tend to be positive for the Canadian dollar. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD negative and the latter positive.
The price of oil is a major factor affecting the value of the Canadian dollar. Petroleum is Canada’s largest export, so oil prices tend to have an immediate impact on the value of the Canadian dollar. In general, if the price of oil rises, the Canadian dollar also rises, as overall demand for the currency increases. The opposite is the case if the price of oil falls. Higher oil prices also tend to increase the likelihood of a positive trade balance, which also supports the Canadian dollar.
While inflation has always been thought to be a negative factor for a currency because it reduces the value of money, the opposite is the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to prompt central banks to raise interest rates, attracting more capital flows from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in Canada’s case is the Canadian dollar.
Macroeconomic data releases measure the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing PMIs, services, employment, and consumer confidence surveys can all influence the direction of the Canadian dollar. A strong economy is good for the Canadian dollar. Not only does it attract more foreign investment, it may encourage the Bank of Canada to raise interest rates, leading to a stronger currency. If economic data is weak, the Canadian dollar will likely fall.
