- The US dollar/CAD trading flat near 1.3950, with a decade less than 200 days.
- DXY reduces to 100.15 as well as flexibility of CPI data distributions in the United States.
- Canada is pushing to eliminate customs tariffs during the Trump era before possible commercial talks with the United States.
The pair of the dollar/CAD remains under pressure for the second day in a row, and is trading an apartment near 1.3950 during the European trading hours on Wednesday. The husband maintains less than 200 days moving average (EMA), coinciding with a wider decrease in the US dollar (USD) after printing the weakest consumer price index (CPI) on Tuesday.
The US dollar index (DXY) settled about 100.15 after it decreased briefly to 99.81 on Wednesday, as it returned further from its highest level in one month earlier this week on Monday. The initial optimism about the customs tariff between the United States and China faded, with traders re -focusing on possible economic repercussions from converting trade dynamics. Meanwhile, the most enlarged inflation data is betting that the Federal Reserve (Fed) can resume the mitigation cycle, as the markets are now pricing in the possibility of price cuts later this year.
On May 12, geopolitical trade tensions remain after the Canada Ambassador to the United States, Kirsten Hellman, on May 12 that the elimination of the “devastating” definitions imposed by the Trump administration is the highest priority in Canada in any future trade talks. Hilman stressed that “there is no discussion with the Americans without being on the table from the perspective of Canada,” describing it as a “starting point” for negotiations. Notes confirm the continuous trade friction between the two countries, adding a layer of uncertainty for the Canadian dollar (CAD) amid the weakness of the US dollar (USD).
Looking at the future, market participants convert their attention to a group of high -influential American data due on Thursday, including the Producers’ price index in April (PPI), retail sales, and weekly initial unemployment demands. Federal Reserve Speaker Jerome Powell will be closely monitored to policy signs, especially amid increasing speculation about the axis of politics.
Questions and answers in Canadian dollars
The main factors that lead the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (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 exports in Canada 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.
