- USD/CAD keeps around 1,4320 in the American session on Monday.
- Trump said he could break some countries on mutual tariffs.
- Higher crude oil prices can increase the commodity -linked Lonie.
The USD/CAD pair is traded with a flat note close to 1,4320 in the late American session on Tuesday. The couple is combined in a narrow trade range due to more confusion about US President Donald Trump’s plans for the scheduled tariff announcement for April 2. The US Conference Board’s consumer trust measurement, new home sales and Richmond Fed Production Index will be released on Tuesday.
Trump said he would announce the tariffs related to automobile imports late on Monday and in the coming days and that some countries would take breaks from mutual tariffs on April 2. Trump pointed out that trade partners will receive possible exemptions or discounts.
However, Trump also stated that he plans to continue the sector -specific tariffs on timber and semiconductors and repeated the threat of imposing task for “very near future” pharmaceutical drugs. Investors are concerned about the potential increase in inflation and stagnation before Trump’s mutual tariffs. This can apply some sales pressure against the Canadian Dollar (CAD) on the Greenback.
In the meantime, an increase in crude oil prices can increase the commodity -connected Loonie and create a head wind for USD/CAD. It should be noted that Canada is the largest oil exporter to the United States (USA) and tends to have a positive impact on CAD value of higher crude oil prices. However, in the hope of a positive result from the Russian-Ukraine peace talks, it may focus under black under the black, underlining Lonie and limiting the losses of the USD/CAD couple.
Canadian Dollars FAQ
The main factors that direct Canada dollars (CAD) are Canada Bank (BOC), petroleum price, Canada’s biggest export, health, inflation and trade balance of its economy, which is a difference against the value of Canada’s exports and imports. Other factors include market sensation-residential Cad-positive, whether or not more risky assets (risk-on) or in search of safe-life (risk-off). As the largest trade partner, the health of the US economy is a key factor affecting the Canadian dollar.
The Canadian Bank (BOC) has a significant impact on the Canadian dollar by determining the level of interest rates that banks can lend to each other. This affects the level of interest rates for everyone. The main purpose of the BOC is to protect inflation as 1-3% by setting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. The Canadian Bank can also use quantitative facilitating and tightening to influence credit conditions with old CAD-negative and second CAD-positive.
The oil price is an important factor that affects the value of the Canadian dollar. Oil is the biggest export of Canada, so the oil price tends to have an immediate effect on CAD value. In general, if the oil price increases, CAD increases as the total demand for the currency increases. On the contrary, if the oil price decreases. Higher oil prices are more likely to have a positive trade balance that supports CAD.
Although inflation is always traditionally considered as a negative factor for a currency because it reduces the value of money, the opposite of this has been valid in modern times with the relaxation of cross -border capital controls. Higher inflation tends to determine the interest rates that attract more capital inflows than global investors looking for a profitable place to protect their money. This increases the demand for the local currency with Canadian dollar in Canada’s case.
Macroeconomic data measures the health of the economy and may have an effect on the Canadian dollar. All indicators such as GDP, manufacturing and services PMIs, employment and consumer emotion surveys may affect the CAD direction. A strong economy is good for Canadian dollar. Not only does it attract more foreign investments, but can also encourage the Canadian Bank to determine interest rates, which can lead to a stronger currency. However, if the economic data is weak, CAD is likely to fall.
