- The Canadian dollar lost 0.25 % against Greenback on Wednesday.
- Canada Bank reduced interest rates by 25 other basis points, to 3 %.
- BOC has also announced the end of the quantitative tightening program.
The Canadian dollar threw a quarter of one percent against Greenback on Wednesday, as it fell after the Bank of Canada (BOC) reduced 25 other basis points of interest rates, thus the BOC’s main reference rate decreased to 3.0 %. The Canadian interest rate reached 5 % in July 2023, and the latest price cuts in BOC are followed by two cuts to the back from 50 basis points in October and December last year.
Canada Bank has also announced the end of the quantitative tightening program, and it is expected that it will be rebuilding asset purchases in early March. However, the BoC TIFF Macklem Governor withdrew from the edge of the abyss, saying that BOC does not expect to restart quantitative dilution programs immediately. The threat that is looming on the horizon is certainly commercial tariffs on a large scale of US President Donald Trump weighing BOC and pricing price exchange markets even nearly that the Canadian Central Bank will reduce the average rate of 25 other basis points in March.
Digest Market Mark: The Canadian dollar is falling for weight after the BOC interest rate is reduced
- Despite the decline in the reduction of interest rates after BOC, the Canadian dollar is still stepping water in its last range, while maintaining the dollar’s failure near the handle of 1.4400.
- With the CAD interest rate differentiated against the US dollar, it is scheduled to go towards Q2, at LONIE Bulls is a limited space for operation.
- Definitions are the threat that is looming on the horizon of BOC’s policy position in 2025.
- BOC policymakers cleaned LONIE, who sits at its lowest level in several years against the US dollar at the present time, but the ongoing decreases may raise policy adjustments to move forward.
- BOC also infiltrated a slight review in the upward direction of inflation expectations, and you now see the annual inflation measures to remain a little higher than the 2.0 % goal to 2026.
- BoC Macklem Governor: The threat of customs tariffs was heavily over the bank’s decision
Canadian dollar price expectations
The Canadian dollar threw some weight against the US dollar for a period of three days in a row, as about four tenths declined during the first half of the trading week and the US dollar/CAD strengthening again over the handle of 1.4400. The couple was in an approximate side grind for more than six weeks after LONIE fell to its lowest levels throughout the year against Greenback and USD/CAD, which was 1.4500 for the first time since the epidemic.
The US dollar/CAD price movement remains annoyed in a volatile flat canal between 1.4300 and 1.4500, with bidding continues to rotate around 1.4400 in the momentum of the graph. The pair generally ends with a fracture at the top of the graphic paper above 1.4500, but the withdrawal of a 50 -day SIA moving average (EMA) rises to 1.4270 may witness an extended dirt segment.
Daily Plan USD/CAD
Questions and answers in Canadian dollars
The main factors that pay the Canadian dollar (CAD) are the level of interest rates set by Canada Bank (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canada’s exports in exchange for its imports. Other factors include market morale-if investors are eating more risky assets (risk) or searching for safe materials (risk)-with positive CAD risks. As its largest commercial partner, the health of the American economy is also a major factor that affects the Canadian dollar.
Canada Bank (BOC) has a major impact on the Canadian dollar by determining the level of interest rates that banks can persuade each other. This affects the level of interest rates for everyone. The main goal of BOC is to keep inflation by 1-3 % by setting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. Canada Bank can also use quantitative dilution and tighten it to influence credit conditions, with previous CAD negative and the other positive CAD.
The price of oil is a major factor that affects the value of the Canadian dollar. Petroleum is the largest export in Canada, so the price of oil tends to an immediate effect on the CAD value. In general, if the price of oil rises, the CAD rises, with the increased total demand for the currency. The opposite is the case if the price of oil decreases. The high oil prices also tend to increase the possibility of a positive commercial balance, which also supports CAD.
While inflation was always believed to be a negative factor of the currency because it reduces the value of money, the opposite was already the case in the modern era with the relaxation of capitalist controls across the border. Top inflation tends to lead the central banks to raise interest rates that attract 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 the case of Canada is the Canadian dollar.
Victory of macroeconomic data evaluates the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing, PMIS, employment services, and consumer morale surveys can affect CAD direction. The strong economy is useful for the Canadian dollar. Not only attracts more foreign investments, but it may encourage Canada Bank to set interest rates, which leads to a stronger currency. If economic data is weak, CAD is likely to fall.
