- Canadian Dollar holds onto slim gains against softer USD.
- Canada remains data-light this week, US inflation data takes center stage.
- US PPI inflation rises on Tuesday, US CPI inflation due Wednesday.
The Canadian Dollar (CAD) is mixed on Tuesday after broader markets focused on the latest round of inflation figures from the US as investors continue to look for signs of rate cuts from the Federal Reserve (Fed). The CAD held onto recent gains against the Greenback but remains mired in technical consolidation.
Canada saw a slightly better-than-expected decline in MoM Wholesale Sales in March, but strictly low-tier data from Canada this week leaves investors overwhelmingly focused on US inflation data. US Producer Price Index (PPI) inflation for April came in higher than expected MoM. Annualized producer-level inflation arrived as expected but was still higher than before as price growth continues to grip the US economy.
Daily digest market movers: Canadian Dollar holds onto the midrange as inflation dominates
- Canadian Wholesales Sales in March fell -1.1%, less than the expected -1.3% decline but still down from the previous month’s 0.2% (revised from 0.0%). Market impact was muted on the low-tier data release.
- US PPI inflation rose again in April, with MoM PPI growing 0.5% compared to the 0.3% forecast and rebounding from the previous month’s -0.1% decline.
- Core PPI for the year ended in April came in as expected at 2.4%, but still rose from the previous period’s 2.1% (revised from 2.4%).
- US Consumer Price Index (CPI) inflation figures are due on Wednesday, and markets are hoping for an easing in consumer-level inflation. YoY CPI is forecast to tick down to 0.3% from 0.4%, and Core CPI is expected to ease slightly to 3.6% from 3.8%.
- Fed Chair Jerome Powell noted in an appearance on Tuesday that “inflation in Q1 was notable for the lack of further progress.”
- Fed Chair Jerome Powell: Producer Price Index reading was quite mixed
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.26% | 0.16% | -0.15% | -0.29% | -0.41% | -0.21% | |
| EUR | 0.29% | 0.02% | 0.46% | 0.16% | 0.01% | -0.10% | 0.09% | |
| GBP | 0.26% | -0.02% | 0.41% | 0.10% | -0.03% | -0.14% | 0.05% | |
| JPY | -0.16% | -0.46% | -0.41% | -0.30% | -0.46% | -0.56% | -0.35% | |
| CAD | 0.15% | -0.16% | -0.10% | 0.30% | -0.16% | -0.25% | -0.07% | |
| AUD | 0.29% | -0.01% | 0.03% | 0.46% | 0.16% | -0.11% | 0.08% | |
| NZD | 0.41% | 0.10% | 0.14% | 0.56% | 0.25% | 0.11% | 0.20% | |
| CHF | 0.21% | -0.09% | -0.05% | 0.35% | 0.07% | -0.08% | -0.20% |
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 grips near-term gains, but bullish stance weakens
The Canadian Dollar (CAD) is broadly mixed on Tuesday, gaining further ground against the Japanese Yen (JPY) and holding steady against the US Dollar (USD). However, the CAD shed thin weight against the Euro (EUR) and Pound Sterling (GBP).
USD/CAD slid back into a familiar demand zone below 1.3660, but the pair is treading water in the near term. Bids continue to cycle near the 200-hour Exponential Moving Average (EMA) at 1.3691.
Technical support is baked into daily candles at the 50-day EMA near 1.3640, and USD/CAD is still trading north of the 200-day EMA at 1.3546 despite trading on the low side of the last swing high near 1.3850. The pair is up over 3% for 2024.
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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