Home Forex The Canadian dollar rose sharply on Friday, benefiting from oil

The Canadian dollar rose sharply on Friday, benefiting from oil

by SuperiorInvest


  • The Canadian dollar rose slightly on Friday as crude oil rose.
  • Retail sales in Canada are falling more than expected, putting a damper on the top.
  • It went up overall for the week, but is still down against the US dollar.

The Canadian dollar (CAD) rose on Friday, supported by a rally in crude oil at the end of the week Oil offers, while CAD traders shrugged their shoulders against the wind for the time being.

Canada saw retail sales fall at a faster-than-expected pace in November, and the Bank of Canada (BoC) was added to a growing list of global central banks expected to cut rates more slowly and at a shallower pace than investors had originally hoped . .

Daily roundup of market moves: Canadian dollar sheds headlines overhang and rebounds on Friday

  • Canadian retail sales fell 0.2% in November, missing the 0.0% forecast and falling further from October’s 0.7%.
  • Core retail sales accelerated the decline, printing at -0.5% versus -0.1% expected and 0.4% previously (revised down from 0.6%).
  • The change in Employment Insurance beneficiaries in Canada rose to 1.7% in November from 0.7% previously.
  • US consumer inflation expectations fell from 2.9% to 2.8% in January, according to the University of Michigan (UoM) consumer survey.
  • The UoM consumer sentiment index also improved in January, rising from 69.7 to 78.8, compared with a forecast of 70.0.
  • US existing home sales fell 1% in December, swallowing November’s 0.8% gain.
  • According to economists polled, the Bank of Canada is expected to start cutting interest rates much later than originally expected, with most not seeing any rate changes until June at the earliest.
  • The overall rate cut is expected to be much shallower than investors had originally hoped.
  • Crude demand from bottomless U.S. refiners and cool output cuts are driving U.S. inventories to fall, keeping crude supplies at record levels and capping Friday’s losses heading into the weekend.

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 strongest against the pound sterling.

American dollar euros GBP CAD AUD JPY NZD CHF
American dollar -0.12% 0.11% -0.38% -0.24% 0.02% 0.11% 0.08%
euros 0.12% 0.22% -0.24% -0.11% 0.14% 0.24% 0.20%
GBP -0.11% -0.23% -0.49% -0.37% -0.08% 0.00% -0.02%
CAD 0.38% 0.25% 0.48% 0.13% 0.38% 0.48% 0.44%
AUD 0.23% 0.14% 0.37% -0.15% 0.26% 0.34% 0.32%
JPY -0.03% -0.15% 0.09% -0.40% -0.23% 0.10% 0.07%
NZD -0.11% -0.24% 0.01% -0.50% -0.36% -0.08% -0.05%
CHF -0.08% -0.17% 0.03% -0.46% -0.33% -0.04% 0.03%

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 gains across the board on Friday, USD/CAD down 1.3500

The Canadian dollar (CAD) is in the green against all of its major currencies on Friday and is up four-tenths to half a percent against the US dollar, the New Zealand kiwi (NZD), the pound sterling (GBP). Japanese yen (JPY).

The American dollar is about a quarter of a percent lower against the Canadian dollar on Friday after an intraday rejection from the 1.3500 level, and near-term momentum shows USD/CAD moving back to the 200-hour simple moving average (SMA) near 1.3430.

Daily candles are hanging on the 200-day SMA just below the 1.3500 level and USD/CAD could see a technical rejection extending into a bearish decline with a price low near 1.3200.

Even if buyers find the momentum needed to carry USD/CAD past the consolidation of the 50-day and 200-day SMAs near 1.3500, there is still a lot of ground to be covered before bids return from the last swing high in early November. around 1.3900.

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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