- USD/CAD remains under pressure around 1.3835 on Tuesday’s timely Asian session.
- Concerns about the independence of the Fed and the US economic slowdown are dragging the US dollar lower.
- Lower oil prices could weigh to Loonies and reduce the pair of disadvantages.
A few USD/CAD It loses the land almost 1.3835 during Tuesday in the first Asian meeting. The US dollar (USD) weakens against the Canadian dollar (CAD) in the midst of fear of slowing in the US and concern about the independence of the Federal Reserve (Feded).
The White House’s economic advisor Kevin Hassett said on Friday that US President Donald Trump deals with whether he can fire the Fed chair Jerome Powell. Trump noted the social contribution in truth that the economy would slow down if Powell immediately did not reduce interest rates. Greenback faces a certain sales pressure and hits a three -year minimum because traders raise questions about Fed’s independence.
In addition, lack of progress in the trust of investors of global business dentists. The tension of the trade seemed to have increased after China warned other nations to avoid any agreement with the US that would hurt Beijing. “If uncertainty continues for a longer period of time-what means more quarter-I think it will become more demanding for earnings and decisions and we have seen something in the earnings season,” said Robert Haworth, senior investment strategist in US Bank.
Meanwhile, a fall in oil prices for signs of progress in interviews between the US and Iran could undermine commodity Loonie. It is worth noting that Canada is the largest oil exporter to the US and lower oil prices tend to have a negative impact on the CAD value.
Canadian Dollar Questions
The key factors that control the Canadian dollar (CAD) are the level of interest rates set by the Canadian bank (BOC), the price of oil, the largest Canadian export, the health of its economy, inflation and business balance, which is the difference between Canadian exports compared to its imports. Other factors include market sentiment-and investors already take over risk asset (risk) or look for safe-havens (Risk-off)-the risk-positive is the CAD-positive. As his largest business partner, the health of the US economy is also a key factor affecting the Canadian dollar.
The Bank of Canada (BOC) has a significant impact on the Canadian dollar by determining the level of interest rates that banks can borrow from each other. This affects the level of interest rates for all. The main goal of BOC is to maintain inflation to 1-3% by adjusting interest rates up or down. Relatively higher interest rates are positive for CAD. Canada’s bank can also use quantitative release and tightening to influence credit conditions, while the former CAD-negative and the second CAD-positive.
The price of oil is a key factor affecting the value of the Canadian dollar. Petroleum is the largest Canadian export, so the price of oil tends to have an immediate impact on CAD. In general, if the price of oil increases, CAD also rises as aggregated inquiry for currency increases. On the contrary, there is a case if the price of oil falls. Higher oil prices also lead to more likely a positive business balance that also supports CAD.
While inflation has always been traditionally considered to be a negative factor for the currency, because it reduces the value of money, the opposite was actually in modern times with the release of cross -border capital controls. Higher inflation tends to lead central banks to determine interest rates that attract more influx of capital from global investors looking for a lucrative place to maintain their money. This increases the demand for local currency, which is a Canadian dollar in Canadian.
Macroeconomic data release the health of the economy and may have an impact on the Canadian dollar. Indicators such as GDP, PMI with production and services, surveys of employment and consumer sentiment may affect the direction of CAD. The strong economy is good for the Canadian dollar. It not only attracts more foreign investments, but can encourage the Canadian bank to set interest rates, leading to a stronger currency. However, if economic data are weak, CAD is likely to fall.
