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Canadian Dollar eases higher as markets look elsewhere

Article
FXStreet in Market News 12 401633
July 11, 2024 05:14

content provided with permission by FXStreet


  • The
    Canadian
    Dollar
    found
    thin
    gains
    on
    Wednesday.

  • Canada
    market
    flows
    remain
    thin,
    and
    no
    meaningful
    CAD
    data
    is
    on
    the
    docket.

  • US
    inflation
    figures
    due
    later
    in
    the
    week
    remain
    the
    key
    risk
    event.

The
Canadian
Dollar
(CAD)
edged
higher
on
Wednesday,
bolstered
more
by
a
general
uptick
in
broad-market
risk
appetite
and
a
bullish
reversal
in
Crude
Oil
than
anything
related
to
a
shift
in
CAD
sentiment.
Federal
Reserve
(Fed)

Chairman
Jerome
Powell
made
his
second
of
two
appearances
in
as
many
days
before
US
Congressional
financial
committees,
delivering
the
Fed’s
latest
Semi-Annual
Monetary
Policy
Report.

Canada
has
had
a
quiet
week
on

the
economic
calendar,
and
the
trend
of
data-less
CAD
trading
is
set
to
continue
until
next
week’s
Canadian
inflation
print
set
for
next
Tuesday,
with
Canadian
Retail
Sales
far-flung
to
next
Friday.
In
the
meantime,
a
key
print
in
US
inflation
figures
will
dominate
market
flows
this
week,
with
US
Consumer
Price
Index
(CPI)
inflation
and
Producer
Price
Index
(PPI)
wholesale
inflation
slated
for
this
Thursday
and
Friday,
respectively.

Daily
digest
market
movers:
Canadian
Dollar
softly
bolstered
by
step-up
in
market
risk
appetite

  • CAD
    traders
    are
    settled
    in
    for
    the
    long
    wait
    for
    Canadian
    CPI
    inflation
    numbers
    due
    next
    week.
  • Data-light
    CAD
    finds
    support
    from
    rising
    Crude
    Oil
    bids
    on
    Wednesday
    plus
    a
    general
    improvement
    in
    investor
    sentiment
    during
    the
    midweek
    market
    session.
  • Fed
    Chair
    Powell
    stuck
    close
    to
    his
    familiar
    script
    during
    his
    two-day
    testimony
    before
    US
    Congressional
    committees
    while
    delivering
    the
    Fed’s
    latest
    Monetary
    Policy
    Report. 
  • Fed
    Chair
    Powell
    noted
    that
    while
    the
    Fed
    still
    wants
    more
    confidence
    that
    inflation
    will
    ease
    to
    the
    US
    central
    bank’s
    2%
    annual
    inflation
    target,
    that
    doesn’t
    necessarily
    mean
    the
    Fed
    will
    wait
    until
    inflation
    has
    hit
    2%
    to
    begin
    easing
    rates.
  • However,
    Fed
    Chair
    Powell
    warned
    that
    despite
    easing
    inflation
    and
    a
    softening
    labor
    market,
    housing
    and
    shelter
    inflation
    remains
    a
    concern.
  • According
    to
    the
    CME’s
    FedWatch
    Tool,
    rate
    traders
    are
    still
    leaning
    fully
    into
    a
    September
    rate
    cut,
    with
    markets
    pricing
    in
    at
    least
    a
    25
    basis
    point
    trim
    to
    the
    fed
    funds
    rate
    on
    September
    18.

  • Jerome
    Powell
    Speech:

    Chairman
    testifies
    before
    House
    Financial
    Services
    Committee

Canadian
Dollar
PRICE
Today

The
table
below
shows
the
percentage
change
of
Canadian
Dollar
(CAD)
against
listed
major
currencies
today.
Canadian
Dollar
was
the
strongest
against
the
New
Zealand
Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.12% -0.47% 0.21% -0.17% -0.09% 0.71% 0.17%
EUR 0.12%   -0.33% 0.35% -0.04% 0.01% 0.81% 0.28%
GBP 0.47% 0.33%   0.71% 0.31% 0.34% 1.15% 0.60%
JPY -0.21% -0.35% -0.71%   -0.37% -0.32% 0.45% -0.08%
CAD 0.17% 0.04% -0.31% 0.37%   0.07% 0.87% 0.31%
AUD 0.09% -0.01% -0.34% 0.32% -0.07%   0.79% 0.24%
NZD -0.71% -0.81% -1.15% -0.45% -0.87% -0.79%   -0.54%
CHF -0.17% -0.28% -0.60% 0.08% -0.31% -0.24% 0.54%  

The
heat
map
shows
percentage
changes
of
major
currencies
against
each
other.
The
base
currency
is
picked
from
the
left
column,
while
the
quote
currency
is
picked
from
the
top
row.
For
example,
if
you
pick
the
Canadian
Dollar
from
the
left
column
and
move
along
the
horizontal
line
to
the
US
Dollar,
the
percentage
change
displayed
in
the
box
will
represent
CAD
(base)/USD
(quote).

Technical
analysis:
Canadian
Dollar
dragged
slightly
higher
by
broader
market
forces

The
Canadian
Dollar
(CAD)
traded
a
step
higher
than
the
US
Dollar
(USD)
on
Wednesday,
up
a
thin
sixth
of
a
percent
against
the
Greenback.
The
CAD
softened
around
three-tenths
of
one
percent
against
the
bullish
Pound

Sterling
(GBP),
and
the
Canadian
Dollar
benefits
from
broad-market
selling
pressure
forcing
the
New
Zealand
Dollar
(NZD)
lower.
The
CAD
is
up
nearly
nine-tenths
of
one
percent
against
the
NZD
on
Wednesday.

USD/CAD
continues
to
churn
just
above
1.3600,
but
near-term
short
pressure
has
pushed
the
USD
lower
against
the
CAD,
sending
the
pair
down
from
intraday
consolidation
near
1.3640.
Daily
candlesticks
continue
to
drift
down
toward
the
200-day
Exponential
Moving
Average
(EMA)
at
1.3590
as
bids
get
squeezed
between
the
long-term
moving
average
and
a
supply
zone
priced
in
above
1.3750.

USD/CAD
hourly
chart

USD/CAD
daily
chart

Canadian
Dollar
FAQs

The
key
factors
driving
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
versus
its
imports.
Other
factors
include
market
sentiment
–
whether
investors
are
taking
on
more
risky
assets
(risk-on)
or
seeking
safe-havens
(risk-off)
–
with
risk-on
being
CAD-positive.
As
its
largest
trading
partner,
the
health
of
the
US
economy
is
also
a
key
factor
influencing
the
Canadian
Dollar.

The
Bank
of
Canada
(BoC)
has
a
significant
influence
on
the
Canadian
Dollar
by
setting
the
level
of
interest
rates
that
banks
can
lend
to
one
another.
This
influences
the
level
of
interest
rates
for
everyone.
The
main
goal
of
the
BoC
is
to
maintain
inflation
at
1-3%
by
adjusting
interest
rates
up
or
down.
Relatively
higher
interest
rates
tend
to
be
positive
for
the
CAD.
The
Bank
of
Canada
can
also
use
quantitative
easing
and
tightening
to
influence
credit
conditions,
with
the
former
CAD-negative
and
the
latter
CAD-positive.

The
price
of
Oil
is
a
key
factor
impacting
the
value
of
the
Canadian
Dollar.
Petroleum
is
Canada’s
biggest
export,
so
Oil
price
tends
to
have
an
immediate
impact
on
the
CAD
value.
Generally,
if
Oil
price
rises
CAD
also
goes
up,
as
aggregate
demand
for
the
currency
increases.
The
opposite
is
the
case
if
the
price
of
Oil
falls.
Higher
Oil
prices
also
tend
to
result
in
a
greater
likelihood
of
a
positive
Trade
Balance,
which
is
also
supportive
of
the
CAD.

While
inflation
had
always
traditionally
been
thought
of
as
a
negative
factor
for
a
currency
since
it
lowers
the
value
of
money,
the
opposite
has
actually
been
the
case
in
modern
times
with
the
relaxation
of
cross-border
capital
controls.
Higher
inflation
tends
to
lead
central
banks
to
put
up
interest
rates
which
attracts
more
capital
inflows
from
global
investors
seeking
a
lucrative
place
to
keep
their
money.
This
increases
demand
for
the
local
currency,
which
in
Canada’s
case
is
the
Canadian
Dollar.

Macroeconomic
data
releases
gauge
the
health
of
the
economy
and
can
have
an
impact
on
the
Canadian
Dollar.
Indicators
such
as
GDP,
Manufacturing
and
Services
PMIs,
employment,
and
consumer
sentiment
surveys
can
all
influence
the
direction
of
the
CAD.
A
strong
economy
is
good
for
the
Canadian
Dollar.
Not
only
does
it
attract
more
foreign
investment
but
it
may
encourage
the
Bank
of
Canada
to
put
up
interest
rates,
leading
to
a
stronger
currency.
If
economic
data
is
weak,
however,
the
CAD
is
likely
to
fall.

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