- In the American session of Monday, the USD/CAD edges fall to approximately 1,4240.
- From Canada, the goods in accordance with the USMCA trade agreement will be exempted from Trump’s tariff.
- Investors are accelerating bets that the FED will reduce interest rates in an aggressive way this year.
USD/CAD pair In the late American session on Monday, it captures the two -day -winning line and weakens to a level close to 1,4240. Last week, US President Donald Trump was higher against Greenback, as he avoided new taxes in a global trade war in a expanding global trade war.
Last week, Trump announced that he swept new tariffs for dozens of countries, and that he had made higher target tasks for all imports to all imports and some of the largest trade partners of the country. Canada and Mexico, except for steel and aluminum, which are covered by automatic export and separate tariff policies, especially avoided this round.
This development provides some support to the US Dollar (USD) to Lonie. “Canada remains relatively protected from the new tariffs tour of Canada, and CAD is performing better than non -USD peers,” TD Securities, Jayati Bharadwaj, a global FX strategist. He said.
Investors raise more interest rate deductions than the USA Federal reserve (Fed) Trump’s tariffs this year increasing the fears of US stagnation. According to the CME Fedwatch vehicle, the markets are currently priced by about 65% of the Fed outage in May, and the futures indicate ratio reductions of approximately 100 basis points (BPS) until December this year. This may lead the USD lower to its competitors in the near term.
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.
