The USD/CAD remains under the Asian hours on Monday for a second session during around 1.3950. The pair acquires land between high oil prices in the form of commodity-linked Canadian dollars (CAD). It is worth noting that Canada is the largest oil exporter in the United States (US).
West Texas Intermediate (WTI) oil price is trading at $ 61.50 per barrel at the time of writing. After the organization of petroleum exporting countries and its associates, crude oil prices acquire land, including Russia, known as OPEC+, declared an expected production growth of more than a small to reduce concerns on increasing supply. The group agreed to increase the output by 137,000 BPD in November on Sunday – the slight increase of October and the earlier expectations fell.
The USD/CAD pair has more depreciation as the US dollar (USD) may face challenges due to the increasing possibility of cutting the US Federal Reserve (FED) rate in upcoming meetings. CME Fedwatch Tool shows that markets are now pricing 95% of the fed rate cuts in October and 84% of another reduction in December.
The opposite of greenback can be stopped as traders failed to pass the proposals for the federal government to reopen the federal government, taking care after the United States (US), expanded the shutdown running in a new week. Closure has suspended major federal programs and delayed major economic reports, which includes the September job data originally due to being Friday.
Canadian Dollar FAQ
Bank of Canada (BOC), the major factor running Canadian dollars (CAD), is the level of the price of the health, inflation and business balance of Canada, the biggest exports of Canada, the health of the health vs. Canada’s export vs. Other factors include market sentiments-Investors are taking more risky assets (risk-per) or demanding safe-description (risk-closer)-with the risk of risk-CAD-positive. As its largest trading partner, the health of the US economy is also an important factor affecting Canadian dollars.
Bank of Canada (BOC) has a significant impact by determining the level of interest rates on Canadian dollars that banks can lend to each other. This affects the level of interest rates for all. The main goal of BOC is to maintain inflation at 1-3% by adjusting the interest rates up or down. The relatively higher interest rates for CAD are positive. Bank of Canada can also use quantitative spontaneity and tightening to affect the credit position with former CAD-negative and subsequent CAD-positive.
The price of oil is a major factor affecting the value of Canadian dollar. Petroleum is Canada’s largest export, so the price of oil has immediate effect on the CAD price. Generally, the CAD also increases if the price of oil increases, as the total demand for currency increases. If the price of oil falls, it is the opposite case. High oil prices are also as a result of the greater possibility of a positive business balance, which is also the support of the CAD.
While inflation was always traditionally considered as a negative factor for a currency because it reduces the value of money, the opposite has actually been a case in modern times with a discount of cross -border capital controls. High inflation motivates central banks to put in interest rates that attracts more capital flow from global investors who are looking for an attractive place to keep their money. This increases the demand for local currency, which is Canadian dollars in the case of Canada.
Macroeconomic data releases the health of the economy and can affect Canadian dollars. Indicators like GDP, manufacturing and services PMI, employment and consumer spirit survey can all affect the direction of CAD. A strong economy is good for Canadian dollars. Not only does it attract more foreign investment, but it can encourage the bank of Canada to keep interest rates, leading to a strong currency. If the economic data is weak, however, CAD is likely to fall.
