Home Forex The Canadian dollar is crushing it as markets chew on mixed data

The Canadian dollar is crushing it as markets chew on mixed data

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  • Canadian dollar stops slide but fails to recover ground.
  • Canadian PMI, Water Sludge Building Permit.
  • BoC Governor Macklem to speak in Montreal.

The Canadian dollar (CAD) has done just that pump Tuesday’s two-day decline is holding back, but the recovery appears limited as Canadian economic numbers look mixed. Loonie bidders await input from Bank of Canada (BoC) Governor Tiff Macklem. Governor Macklem will deliver a speech on the effectiveness and limits of monetary policy to the Montreal Council on Foreign Relations at 18:00 GMT, but the text of the speech will be released at 17:45 GMT. BoC Mackle is expected to take questions from the audience after the speech.

Canada saw a sharp decline in MoM building permits in December, as well as a downward revision to previous months’ releases, although the highly revised indicator is prone to a muted impact. The seasonally adjusted Ivey Purchasing Managers Index (PMI) rose slightly for January, helping to offset any bearish drops in building permits. Flat raw Oil markets also keep the Canadian dollar afloat, but price action lacks momentum.

Daily overview of market movements: The Canadian dollar took a breather

  • BoC Governor Macklem’s speech remarks will be released at 17:45 GMT, with Macklem expected to answer questions after the statement at 18:00 GMT.
  • Canadian building permits fell 14% in December, well below expectations for a 1.2% increase and the worst reading for Canadian building permits since last April.
  • November building permits also saw a downward revision to -5% from -3.9%.
  • Canada’s unadjusted Ivey PMI for January rose to 54.4 from 43.7.
  • The seasonally adjusted Ivey PMI rose for the fourth month in a row, but was noticeably thinner at 56.5 from 56.3 previously.
  • Markets had expected January’s adjusted Ivey PMI to fall to 55.0.
  • This week, the Bank of Canada’s latest meeting summary will be released on Wednesday, with wages and labor data due on Friday.

Canadian dollar price today

The chart below shows today’s percentage change for the Canadian dollar (CAD) against the major listed currencies. The Canadian dollar was the weakest against the Australian dollar.

American dollar euros GBP CAD AUD JPY NZD CHF
American dollar -0.07% -0.44% -0.26% -0.52% -0.38% -0.28% -0.01%
euros 0.07% -0.36% -0.21% -0.45% -0.33% -0.22% 0.06%
GBP 0.41% 0.36% 0.16% -0.10% 0.03% 0.14% 0.40%
CAD 0.25% 0.20% -0.16% -0.25% -0.12% -0.02% 0.26%
AUD 0.53% 0.46% 0.10% 0.27% 0.15% 0.26% 0.53%
JPY 0.38% 0.32% -0.05% 0.14% -0.17% 0.11% 0.37%
NZD 0.28% 0.21% -0.15% 0.02% -0.24% -0.11% 0.27%
CHF 0.01% -0.07% -0.42% -0.27% -0.52% -0.38% -0.28%

The heat map shows the percentage changes of major currencies against each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the box will be EUR (base)/JPY (rate).

Technical analysis: Canadian dollar is flat as USD/CAD passes around 1.3500

The Canadian dollar (CAD) is broadly mixed on Tuesday but looks higher. The CAD is a quarter of a percent lower against the Australian dollar (AUD) and a tenth of a percent against the Japanese yen. The CAD is also roughly a quarter of a percent higher against the US dollar (USD) and euro (EUR).

USD/CAD drifted to a short-term ceiling at 1.3540 as the pair cycled near the 1.3500 handle. The pair climbed 1.33% from the bottom to the top. American dollar rebounded against the Canadian dollar late last week and CAD is looking for support to recover and pull USD/CAD back below the 1.3500 level. This would retrace to the 200-hour simple moving average (SMA) at 1.3450.

USD/CAD is struggling to maintain bullish momentum after breaking through the upper side of the 200-day SMA on Monday, and the pair is in danger of getting back into overdrive between 1.3476 and 1.3426 as the 200-day and 50-day SMAs consolidate. .

USD/CAD hourly chart

USD/CAD Daily Chart

Frequently asked questions about the Canadian dollar

The key factors that determine 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 and its imports. Other factors include market sentiment – ​​whether investors are taking on riskier assets (risk-on) or seeking safe havens (risk-off) – with risk-on being a positive CAD. The health of the US economy as its largest trading partner is also a key factor influencing the Canadian dollar.

The Bank of Canada (BoC) has significant influence on the Canadian dollar by setting the interest rates at which banks can lend to each other. This affects the amount of interest rates for everyone. The main objective of the BoC is to keep inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, the former being negative and the latter positive.

The price of oil is a key factor affecting the value of the Canadian dollar. Oil is Canada’s largest export, so the price of oil tends to have an immediate impact on the CAD value. In general, if the price of oil rises, so will the CAD, as aggregate demand for the currency increases. The opposite is the case if the price of oil falls. Higher oil prices also tend to lead to a greater likelihood of a positive trade balance, which also supports the CAD.

While inflation has always traditionally been seen as a negative factor for a currency as it reduces the value of money, in modern times with the loosening of cross-border capital controls, the opposite has been the case. Higher inflation tends to lead central banks to raise interest rates, which attracts more capital inflows from global investors looking for a lucrative place to keep their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.

Macroeconomic data assesses the health of the economy and can impact the Canadian dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys can all influence the direction of CAD. A strong economy is good for the Canadian dollar. Not only will this attract more foreign investment, but it may encourage the Bank of Canada to raise interest rates, leading to a stronger currency. However, if economic data is weak, the CAD is likely to fall.

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