- The Canadian dollar made some progress against the US dollar on Friday.
- Canada Bank is preparing to provide another interest rates next week.
- The weakness in the US dollar index pushes the Canadian dollar to the top of the Canadian dollar itself.
The Canadian dollar (CAD) rose by about one percent against the US dollar on Friday, as it tested higher levels but is still firmly firmly in the consolidation pattern that began in mid -December. The US dollar is declining in all fields to conclude a largely improper trading week, instead of the Canadian dollar finding any fundamental purchase pressure, which means that it is unlikely to continue the bullish momentum.
Canada Bank (BOC) is preparing for another quarter of interest rates next week, while the Federal Reserve (Fed) will remain constant on interest rates during the first half of the year. With the expected teams to expand interest rates on the US dollar/Canadian dollar, it is unlikely that foreign currency markets will find a great reason for raising the Canadian dollar price after both central banks invite the interest rate, scheduled for next Wednesday.
The daily summary of market engines: Canadian dollar gains are weak due to the high risk morale
- The Canadian dollar rose by about a quarter of a percent against the US dollar.
- The Canadian dollar gains from the decline in demand in the market on the US dollar instead of any fundamental force.
- Canada Bank is expected to reduce interest rates by 25 basis points next week.
- The Federal Reserve, which is scheduled to be released after just hours, will remain fixed.
- There is nothing else worth noting in the Canadian dollar’s economic spreadsheet next week.
Canadian dollar price expectations
The consolidation phase of the US dollar/Canadian dollar pair continues to move sideways, as the Canadian dollar traders are struggling to pay in any of the two directions decisively. The price movement is still restricted around the level of 1.4400, although the Canadian dollar is tested repeatedly the lowest new levels in several years.
The last ups of the husband has already exhausted its strength, as the Si -SIME for 50 days rose to 1.4250, but there are still signs on a absent technical shift. In the near term, purchase requests remain bound by the technical floor of the handle 1.4300.
The daily graph of the US dollar pair/Canadian dollar
Common questions about the Canadian dollar
The main factors that move the Canadian dollar (CAD) are the level of interest rates set by Canada Bank (BOC), the price of oil, the largest exports of Canada, the health of its economy, inflation and commercial scale, which is the difference between the value of Canada’s exports against its imports. Other factors include market morale – whether investors are heading to more dangerous assets (risk demand) or looking for safe havens (avoiding risk) – with risk being positive for the Canadian dollar. As his largest commercial partner, the health of the American economy is also a major factor that affects the Canadian dollar.
Canada (BOC) has a major impact on the Canadian dollar by determining the level of interest rates that banks can lend to each other. This affects the level of interest rates for everyone. The main goal of Canada Bank is to maintain the inflation rate at 1-3% by adjusting interest rates up or down. Relatively high interest rates tend to be positive for the Canadian dollar. Canada Bank can also use quantitative facilitation and stress to influence credit conditions, as the former Canadian dollar is negative and the last positive.
The price of oil is a major factor that affects the value of the Canadian dollar. Petroleum is the largest exports of Canada, 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, with the total demand for the currency increased. The opposite is the case if the price of oil decreases. High oil prices also tend to increase the possibility of a positive commercial balance, which also supports the Canadian dollar.
While it was always believed that inflation is a negative factor for the currency because it reduces the value of money, the opposite is the case in the modern era while reducing the controls of capital across the border. The high inflation tends to push 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 the case of Canada is the Canadian dollar.
The issues of total economy data measure the health of the economy and can have an impact on the Canadian dollar. Indicators such as gross domestic product and indicators of manufacturing purchases, services, employment and consumer polls can all affect the direction of the Canadian dollar. The strong economy is useful for the Canadian dollar. It not only attracts more foreign investment, but it may encourage Canada Bank to raise interest rates, which leads to a stronger currency. If economic data is weak, the Canadian dollar is likely to decrease.
