- The Canadian Dollar continues to lose ground, down 1% on the week.
- Loonie traders will be looking ahead to Canada GDP figures next Tuesday.
- Crude Oil prices also down for the week, draining support from the CAD.
The Canadian Dollar (CAD) is seeing more declines for Friday and is set to mark a fourth lower day in a row as Loonie traders are having a difficult time finding reasons to bid the CAD.
It’s a quiet market on Friday, but next week brings Canada Gross Domestic Product (GDP) numbers on Tuesday. CAD investors can expect to get jostled frequently by US data all through next week. The Federal Reserve (Fed) makes another rate call on Wednesday and US Non-Farm Payrolls (NFP) are slated for next Friday. The latter coincides with Canadian wages and employment figures.
Daily Digest Market Movers: Canadian Dollar continues backslide, Loonie tumbles against US Dollar
- The CAD is down 1.5% and counting from the week’s highest bids against the USD.
- Friday is set to be day number four of consecutive losses for the Loonie as markets bid the Greenback.
- The BoC has a significant uphill climb before it as inflation risks continue to increase.
- Canadian economic growth is also faltering, limiting the BoC’s policy toolkit.
- Tuesday’s upcoming Canada GDP reading will be important for CAD traders, could see Canada’s technical recession steepen further.
- Despite risks, BoC says they’re willing to raise rates further “if needed”.
- Next week will close out with another US NFP print.
Technical Analysis: USD/CAD hits 12-month high, heading for 1.3900
The Canadian Dollar (CAD) is slumping into new lows for the year against the US Dollar (USD), sending the USD/CAD toward the 1.3900 handle on Friday. The pair is currently trading near 1.3870, and all it will take is one last push to reclaim the price level the pair hasn’t seen since October 2022.
A technical support zone from 1.3600 to 1.3650 stands nearby to bump any downside corrections, with the 50-day Simple Moving Average (SMA) rising into the 1.3600 handle to add further support.
Further beyond that, the 200-day SMA is turning bullish and catching some lift into 1.3500.
The USD/CAD is now up nearly 6% from 2023’s bottom bids of 1.3092.
USD/CAD Hourly Chart
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.02% | 0.16% | 0.39% | -0.05% | -0.55% | 0.30% | 0.37% | |
EUR | -0.01% | 0.15% | 0.38% | -0.06% | -0.56% | 0.29% | 0.36% | |
GBP | -0.16% | -0.15% | 0.23% | -0.21% | -0.71% | 0.14% | 0.21% | |
CAD | -0.40% | -0.38% | -0.24% | -0.45% | -0.94% | -0.09% | -0.01% | |
AUD | 0.04% | 0.05% | 0.19% | 0.44% | -0.49% | 0.33% | 0.40% | |
JPY | 0.53% | 0.55% | 0.71% | 0.92% | 0.51% | 0.87% | 0.91% | |
NZD | -0.29% | -0.30% | -0.11% | 0.10% | -0.34% | -0.85% | 0.10% | |
CHF | -0.41% | -0.37% | -0.26% | 0.02% | -0.46% | -0.92% | -0.08% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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