Select Language

USD/CAD remains depressed near 1.3470-1.3465 area, weaker Oil prices to limit losses

blockHeadVisual
  1. HOME
  2. Get information
  3. World FX news
  4. USD/CAD remains depressed near 1.3470-1.3465 area, weaker Oil prices to limit losses

World FX news

search
Breaking news

USD/CAD remains depressed near 1.3470-1.3465 area, weaker Oil prices to limit losses

  • X
  • facebook
  • LINE
  • RSS
  • X
  • facebook
  • LINE
  • RSS
New update 2024.09.26 14:08
USD/CAD remains depressed near 1.3470-1.3465 area, weaker Oil prices to limit losses

update 2024.09.26 14:08

  • USD/CAD attracts fresh sellers on Wednesday amid a modest USD downtick.
  • Dovish Fed expectations, along with a positive risk tone, weigh on the buck.
  • Sliding Oil prices to undermine the Loonie and lend support ahead of Fed's Powell.

The USD/CAD pair meets with some supply during the Asian session on Thursday and erodes a part of the overnight recovery gains from the 1.3420 region, or its lowest level since March 8. Spot prices currently trade around the 1.3470-1.3465 region, down over 0.10% for the day amid a modest US Dollar (USD) downtick, though some follow-through selling around Crude Oil prices could help limit deeper losses.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, stalls the overnight goodish rebound from the vicinity of the YTD low amid bets for another 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November. Apart from this, the underlying bullish tone - as depicted by a fresh leg up in the equity markets - further undermines the safe-haven buck and exerts some downward pressure on the USD/CAD pair. 

Meanwhile, doubts about sustained fuel demand growth in China - the world's top oil importer - and easing worries over supply disruptions in Libya drag Crude Oil prices further away from a three-week high touched on Tuesday. Despite a slew of stimulus measures announced this week, investors remain uncertain about China's economic recovery. This, along with signs of the return of Libyan oil to the market, further seems to weigh on the black liquid. 

This, in turn, could undermine demand for the commodity-linked Loonie and lend some support to the USD/CAD pair. Traders might also prefer to move to the sidelines and refrain from placing aggressive directional bets ahead of speeches by influential FOMC members, including Fed Chair Jerome Powell, later during the North American session. Apart from this, the US economic data will drive the USD demand and produce short-term trading opportunities.

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

 : 2024.09.26

Update

Last updated

 : 2024.09.26

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

USD/CHF holds position around 0.8500 ahead of SNB interest rate decision

Next article

China's Politburo: Will lower RRR, implement forceful interest rates cut

prev

Most viewed

Silver Price Forecast: XAG/USD pares intraday losses, down a little below $32.00 mark

Silver (XAG/USD) extends the overnight modest pullback from the $32.70 area, or its highest level since December 2012 and remains under some selling pressure during the Asian session on Friday.
New
update2024.09.27 12:58

EUR/USD depreciates to near 1.1150 ahead of speeches from ECB Lane, Cipollone

EUR/USD retraces its recent gains registered in the previous session, trading around 1.1170 during the Asian session on Friday.
New
update2024.09.27 12:55

GBP/USD retreats from its highest level since March 2022, slips below 1.3400 mark

The GBP/USD pair drifts lower during the Asian session on Friday and moves away from its highest levels since March 2022, around the 1.3435 region touched the previous day.
New
update2024.09.27 12:19

Japanese Yen depreciates following Tokyo CPI inflation, US PCE Price Index eyed

The Japanese Yen (JPY) extends its downside for the third successive session following the Tokyo Consumer Price Index (CPI) data released on Friday.
New
update2024.09.27 12:16

NZD/USD slides to 0.6300 mark, downside seems cushioned ahead of US PCE Price Index

The NZD/USD pair attracts some sellers near the 0.6335 region during the Asian session on Friday and reverses a part of the previous day's strong move up.
New
update2024.09.27 11:46

WTI remains under pressure below $71.50 as Saudi Arabia commits to increase oil production.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.30 on Friday.
New
update2024.09.27 11:29

Gold price consolidates below record high as traders await US PCE Price Index

Gold price (XAU/USD) extended its record-breaking run for the fifth straight day on Thursday amid the emergence of fresh US Dollar (USD) selling.
New
update2024.09.27 11:15

Australian Dollar depreciates, the downside seems limited due to improved risk sentiment

The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Friday.
New
update2024.09.27 10:52

USD/INR recovers ahead of US PCE data

The Indian Rupee (INR) loses momentum on Friday amid the renewed US Dollar (USD) demand from importers related to month-end payments and the likely unwinding of long positions.
New
update2024.09.27 10:39

PBOC sets USD/CNY reference rate at 7.0101 vs. 7.0354 previous

The People's Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Friday at 7.0101, as compared to the previous day's fix of 7.0354 and 7.0093 Reuters estimates.
New
update2024.09.27 10:18

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