- The US dollar/CAD attracts some buyers on Tuesday, although it lacks follow -up.
- Increasing oil prices supports LONIE and stops the budget of the husband.
- Canadian consumer price index is looking for some motivation before the Federal Reserve decision on Wednesday.
It seems that the US dollar couple/CAD is higher during the Asian session on Tuesday and now, it has made a losing line for two days for more than one week, around the 1.4275 region that touched the day before. Immediate prices are now looking to build on the move during the afternoon to the round number 1.4300, although the basic background calls for some caution to the upscale traders.
The US dollar (USD) has a modest recovery from its lowest level since October 2024 amid some trade that re -places it before the risks of the main central bank event for this week, which in turn is considered as the back wind of the pair of the dollar/CAD. However, any meaningful appreciation in US dollars is still far in the wake of the increasing acceptance that will reduce the Federal Reserve (Fed) interest rates several times this year.
Meanwhile, crude oil prices remain close to the two -week higher on Monday, amid the risk of an additional escalation of tensions in the Middle East, which may affect the supply. This, in addition to the positive news that comes out of the United States and Canada talks last week, must support LONIE associated with the commodity and contribute to determining the pair of the dollar/CAD, which calls for some caution for the aggressive budget merchants.
Traders may also refrain from setting aggressive bets and choose to wait for the results of a two -day long -awaited FOMC policy meeting, scheduled to be announced on Wednesday. Meanwhile, traders will take signals on Tuesday from the release of the latest numbers of consumer enlargement from Canada. This, in addition to macro data in the United States of the United States, must provide some motivation for the pair of the dollar/CAD.
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.
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