The dollar/CAD decreases to approximately 1.4400, as Trump is delayed by Canadian tariffs 30 days
- The US dollar/CAD attracts some sellers to about 1.4410 in a session late Monday, a decrease of 1.09 % a day.
- Trump confirmed the postponement of his tariff in Canada.
- We outperformed ISM’s estimates in January.
The pair of the dollar/CAD fell to approximately 1.4410 during the late American session on Monday. The Canadian dollar (CAD) contradicts an unprecedented level since 2003, as US President Donald Trump confirmed his Canadian definitions in a position on social truth.
Late Monday, Trump said he would stop for a single month of customs tariffs by 25 % on the goods entering the United States from Mexico and Canada. This announcement came two days after Trump slapped 25 % on goods from Mexico and Canada and 10 % tariffs on goods imported from China. LONIE attracts some buyers in an immediate reaction to this address.
On the other hand, optimistic US economic data can provide some support to the US dollar (USD). Data issued by the ISM Institute of Supply Management (ISM) showed that manufacturer managers rose to 50.9 in January 49.3 in December. This reading came in the best estimate of 49.8. Merchants will take more sermon from Fedspeak. The Federal Reserve (Fed) is scheduled to speak Raphael Bosctic and Mary Daly later on Tuesday.
According to the CME Fedwatch tool, markets reduce price discount expectations from the Federal Reserve in the wake of tariff news, with futures prices at only 50 % of this year’s discounts. This, in turn, may support Greenback in the short term.
Questions and answers in Canadian dollars
The main factors that pay the Canadian dollar (CAD) are the level of interest rates set by Canada Bank (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canada’s exports in exchange for its imports. Other factors include market morale-if investors are eating more risky assets (risk) or searching for safe materials (risk)-with positive CAD risks. As its largest commercial partner, the health of the American economy is also a major factor that affects the Canadian dollar.
Canada Bank (BOC) has a major impact on the Canadian dollar by determining the level of interest rates that banks can persuade each other. This affects the level of interest rates for everyone. The main goal of BOC is to keep inflation by 1-3 % by setting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. Canada Bank can also use quantitative dilution and tighten it to influence credit conditions, with previous CAD negative and the other positive CAD.
The price of oil is a major factor that affects the value of the Canadian dollar. Petroleum is the largest export in Canada, so the price of oil tends to an immediate effect on the CAD value. In general, if the price of oil rises, the CAD rises, with the increased total demand for the currency. The opposite is the case if the price of oil decreases. The high oil prices also tend to increase the possibility of a positive commercial balance, which also supports CAD.
While inflation was always believed to be a negative factor of the currency because it reduces the value of money, the opposite was already the case in the modern era with the relaxation of capitalist controls across the border. Top inflation tends to lead the central banks to raise interest rates that attract more capital flows from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
Victory of macroeconomic data evaluates the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing, PMIS, employment services, and consumer morale surveys can affect CAD direction. The strong economy is useful for the Canadian dollar. Not only attracts more foreign investments, but it may encourage Canada Bank to set interest rates, which leads to a stronger currency. If economic data is weak, CAD is likely to fall.
