The US dollar/CAD holds less than 1.4450 in the most softened US dollar, and investors are waiting for the issuance of US procurement managers
- The dollar/CAD reduces approximately 1.4440 in the early Asian session on Monday.
- The GDP Q4 in Canada grew by 2.6 % on an annual basis, stronger than expected.
- Trump will determine accurate levels of Mexico, and Canada on Tuesday.
The USD/CAD pair weakens about 1.4440 during the early Asian session on Monday. The Canadian economic growth supports the most powerful and frequent recovery in love oil prices. In February ISM will receive the lead position later on Monday.
The data issued by Statistics Canada on Friday showed that the GDP in Canada (GDP) in the fourth quarter (Q4) expanded by 2.6 % on an annual basis, over the estimate of 1.9 %. “The Canadian economy has definitely faced some opposite winds, but he went out in 2024 in a stronger position than belief,” said Adam Patton, chief currency analyst at the Forex.
Meanwhile, the rise in crude oil prices supports the Canadian dollar associated with the commodity (CAD). It should be noted that Canada is the largest oil exporter for the United States (the United States), and it tends to rise in crude oil prices to a positive impact on the CAD value.
On the other hand, US President Donald Trump said on Thursday that he intends to move forward with a 25 % tariff on imports from Canada and Mexico, which is scheduled to enter into force on Tuesday. Traders will closely monitor the developments surrounding more Trump tariff policies. Any signs of commercial tensions can raise green against CAD in the short term.
Questions and answers in Canadian dollars
The main factors that lead the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (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 exports in Canada 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.
