Select Language

USD/CAD remains below 1.3500 due to higher Oil prices, US PCE eyed

blockHeadVisual
  1. HOME
  2. Get information
  3. World FX news
  4. USD/CAD remains below 1.3500 due to higher Oil prices, US PCE eyed

World FX news

search
Breaking news

USD/CAD remains below 1.3500 due to higher Oil prices, US PCE eyed

  • X
  • facebook
  • LINE
  • RSS
  • X
  • facebook
  • LINE
  • RSS
update 2024.08.30 16:49
USD/CAD remains below 1.3500 due to higher Oil prices, US PCE eyed

update 2024.08.30 16:49

  • USD/CAD inches lower due to rise in crude Oil prices.
  • The WTI price gains ground due to supply concerns in the Middle East.
  • The US Dollar holds its position ahead of the US PCE Price Index.

USD/CAD snaps its two-day winning streak, trading around 1.3480 during the European session on Friday. The downside of the USD/CAD pair could be attributed to the commodity-linked Canadian Dollar (CAD), which receives support from higher crude Oil prices. Given the fact that Canada is the largest Oil exporter to the United States (US).

The West Texas Intermediate (WTI) Oil price continues to rise, trading around $75.70 per barrel at the time of writing. This increase is driven by supply concerns in the Middle East. Worries about reduced Libyan Oil supplies and Iraq's plans to curb production are contributing to these supply fears, which in turn are bolstering Oil prices.

The downside for the USD/CAD pair may be limited, as the US Dollar continues to hold its recent gains after stronger-than-expected economic data released on Thursday. However, dovish comments from the Federal Reserve could restrain further upward movement for the Greenback.

Federal Reserve Atlanta President Raphael Bostic, a prominent hawk on the FOMC, indicated on Thursday that it might be "time to move" on rate cuts due to further cooling inflation and a higher-than-expected unemployment rate. However, he wants to wait for confirmation from the upcoming monthly jobs report and two inflation reports before the Fed's September meeting.

Investors await July's US Personal Consumption Expenditure (PCE) Price Index scheduled to be released later in the North American Session, seeking clues about the future direction of US interest rates.

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.

Date

Created

 : 2024.08.30

Update

Last updated

 : 2024.08.30

Related articles

Show more

Writer

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?
No loading Yes loading

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Previous article

prev

Forex Today: US Dollar clings to weekly recovery gains ahead of PCE inflation

Next article

Pound Sterling rises above 1.3150 ahead of US core PCE inflation

prev

Most viewed

Australian Dollar on the rise amid Greenback weakness

The AUD/USD rose by 0.70% to 0.6815 in Thursday's session. This marks the fourth consecutive session of gains for the AUD/USD, as the Greenback continues to weaken in the wake of the Federal Reserve's (Fed) 50-basis-point rate cut.
New
update2024.09.20 05:30

USD/JPY Price Forecast: Clings to gains after failing to clear 144.00

The USD/JPY held on to gains following Wednesday's Federal Reserve decision but traded well below its daily peak of 143.94 as the Greenback registered losses.
New
update2024.09.20 05:23

Canadian Dollar gets a push from Fed cuts but still hobbled

The Canadian Dollar (CAD) remains overall weaker on Thursday, though the CAD was able to eke out a stronger stance against the Greenback, with the USD getting pummeled after the Federal Reserve (Fed) cut interest rates for the first time in four years by an outsized 50 bps.
New
update2024.09.20 04:38

Forex Today: Will the BoJ surprise markets?

The Greenback could not sustain the optimism seen during the Asian trading hours, eventually surrendering that advance and ending the day with marked losses as investors assessed the prospects of further easing by the Fed in the months to come.
New
update2024.09.20 04:01

Gold price benefits from Fed's cut, buyers eye $2,600

Gold prices advanced on Thursday after the Federal Reserve (Fed) embarked on an easing cycle with a 50-basis-point (bps) rate cut.
New
update2024.09.20 03:54

US Dollar declines as market digests FOMC decision

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, is trading flat near 100.70 on Thursday as the market digests the Federal Reserve's (Fed) 50-basis-point (bps) cut.
New
update2024.09.20 03:22

Dow Jones Industrial Average climbs into another record high

The Dow Jones Industrial Average (DJIA) pierced the 42,000 psychological level on Thursday as equities drove higher in a broad-market bull run after the Federal Reserve (Fed) finally delivered its first rate cut in over four years.
New
update2024.09.20 02:37

Mexican Peso stays flat following Fed rate cut, eyes on Banxico

The Mexican Peso remained unchanged against the US Dollar during the North American session on Thursday after the Federal Reserve (Fed) lowered interest rates for the first time in four years.
New
update2024.09.20 01:24

EUR/GBP Price Analysis: Technical outlook favors the downside as selling pressure mounts

Thursday's session saw the EUR/GBP slightly decline by 0.20% below 0.8400.
New
update2024.09.20 01:00

EUR/JPY surges on sentiment improvement yet struggles at 160.00

The Euro rallied sharply against the Japanese Yen on Thursday amid a scarce economic docket.
New
update2024.09.19 23:13

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

arw
  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Line

Line
Facebook

Facebook
X

Twitter
Cancel