Mon. May 20th, 2024

CANADIAN DOLLAR FALLS BACK ON TUESDAY AMID BROAD-MARKET GREENBACK BIDDING

The Canadian Dollar (CAD) eased against the Greenback on Tuesday after the American market session kicked the day off with a risk-off push after US wages outpaced expectations.

  • Canadian Dollar retreats after US morning session’s risk-off jitters.
  • Canada GDP prints below expectations, erodes CAD further.
  • US wage growth accelerates again, crimping rate cut hopes.

The Canadian Dollar (CAD) eased against the Greenback on Tuesday after the American market session kicked the day off with a risk-off push after US wages outpaced expectations. Investors are gearing up for the US Federal Reserve’s (Fed) latest rate call, slated for Wednesday. 

Canada saw a further slowing in Gross Domestic Product (GDP) figures in February, further hampering the Canadian Dollar. Declines in the Antipodeans gave the CAD a boost in Pacific markets, sending the Canadian Dollar into another mixed trading day. 

Daily digest market movers: Canadian Dollar retreats in wake of Greenback jump

  • Canadian MoM GDP in February rose 0.2%, below the forecast for 0.3% and falling back from January’s 0.5% (revised down from 0.6%).
  • US Q1 Employment Cost Index accelerated to 1.2%, beating the forecast of 1.0% and the previous quarter’s 0.9% wage growth.
  • Accelerating labor costs continue to plague rate-cut-hungry markets as inflation remains above Fed targets and progress on reducing price growth has stalled.
  • April’s Chicago Purchasing Managers Index (PMI) eased to 37.9, the indicator’s lowest print since November 2022.
  • The Consumer Board’s Consumer Confidence Index declined to 97.0, nearly a two-year low in aggregate consumer survey responses.
  • Read more: US CB Consumer Confidence declines to 97.0 in April
  • US ADP Employment Change for April will print on Wednesday, forecast to tick down to 179K from 184K.
  • Fed’s latest rate call and Monetary Policy Statement are scheduled for 18:00 GMT on Wednesday. Fed Chair Jerome Powell will hold a press conference 30 minutes after that.
  • Fed is expected to hold rates steady, and investors will be looking for signs of firmer policy guidance from the Fed on when rate cuts could come.
  • According to CME’s FedWatch Tool, rate cut hopes for September have been dashed, and rate markets are pricing in 51.1% odds of no cut until the November rate meeting.

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 Australian Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD 0.22%0.32%0.59%1.03%0.68%0.94%0.70%
EUR-0.21% 0.09%0.37%0.79%0.44%0.72%0.48%
GBP-0.32%-0.08% 0.25%0.72%0.33%0.63%0.38%
CAD-0.59%-0.34%-0.26% 0.47%0.07%0.37%0.13%
AUD-1.07%-0.82%-0.75%-0.47% -0.40%-0.10%-0.34%
JPY-0.68%-0.41%-0.33%-0.08%0.40% 0.28%0.05%
NZD-0.93%-0.72%-0.63%-0.39%0.11%-0.30% -0.24%
CHF-0.68%-0.48%-0.39%-0.13%0.35%-0.04%0.24% 

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).

Technical analysis: Canadian Dollar mixed as broader market flows push CAD around

The Canadian Dollar is broadly mixed on Tuesday, shedding half a percent against the US Dollar (USD) and around a third of a percent against the Euro (EUR). Pacific market weakness saw the CAD climb around four-tenths of a percent against the Antipodeans.

USD/CAD broke into a fresh five-day high during Tuesday’s US market session, challenging the 1.3750 region as the pair bounces from a heavy supply zone between 1.3680 and 1.3630. Bids are still down from the last swing high into 1.3845, but buyers are pushing back into chart territory north of the 200-hour Exponential Moving Average (EMA) at 1.3688.

USD/CAD hourly chart

USD/CAD daily chart

CANADIAN DOLLAR FAQS

What key factors drive the Canadian Dollar?

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.

How do the decisions of the Bank of Canada impact the Canadian Dollar?

How does the price of Oil impact the Canadian Dollar?

How does inflation data impact the value of the Canadian Dollar?

How does economic data influence the value of the Canadian Dollar?

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