Select Language

USD/CAD consolidates in a range above 1.4300 mark amid mixed cues

Breaking news

USD/CAD consolidates in a range above 1.4300 mark amid mixed cues

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.03.31 12:12
USD/CAD consolidates in a range above 1.4300 mark amid mixed cues

update 2025.03.31 12:12

  • USD/CAD lacks firm intraday direction on Monday amid a combination of diverging factors. 
  • Fed rate cut bets and concerns about a slowing economy continue to weigh on the Greenback.
  • Subdued Crude Oil prices undermine the Loonie and support the pair amid the risk-off mood.  

The USD/CAD pair struggles to capitalize on its modest bounce from the monthly low touched last Wednesday and kicks off the new week on a subdued note amid mixed cues. Spot prices, however, hold above the 100-day Simple Moving Average (SMA) pivotal support and currently trade around the 1.4300 mark, nearly unchanged for the day.

The US Dollar (USD) selling bias remains unabated for the third successive day on Monday as the uncertainty over US President Donald Trump's aggressive trade policies continues to fuel worries about a tariff-driven US economic slowdown. This remains supportive of the growing market acceptance that the Federal Reserve (Fed) could resume its rate-cutting cycle and keep the USD bulls on the defensive, which, in turn, acts as a headwind for the USD/CAD pair. 

Meanwhile, the USD bulls largely shrug off signs of rising inflation in the US. In fact, the US Personal Consumption Expenditure (PCE) Price Index showed on Friday that the core gauge that excludes volatile food and energy prices rose 0.4% in February, marking the biggest monthly gain since January 2024 and lifting the yearly rate to 2.8%. Moreover, the University of Michigan's 12-month inflation expectations soared to the highest level in nearly 2-1/2 years in March. 

However, the prevalent risk-off environment, ahead of US President Donald Trump's reciprocal tariffs due to be announced on Wednesday, helps limit the downside for the safe-haven Greenback. Trump last week rattled markets by imposing a 25% tariff on all non-American cars and light trucks. Adding to this, a report over the weekend said that Trump will consider higher tariffs against a broader range of countries, which will take effect from April 2. 

Furthermore, hopes for a Ukraine peace deal keep Crude Oil prices below a multi-week high touched last Wednesday, which further seems to undermine the commodity-linked Loonie and lend some support to the USD/CAD pair. This, in turn, warrants some caution before positioning for the resumption of the currency pair's recent well-established downtrend from the vicinity of mid-1.4500s, or the monthly swing high touched on March 4. 

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

 : 2025.03.31

Update

Last updated

 : 2025.03.31

Related articles


Show more

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?

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.

Most viewed

TRY: Re-establishing credibility is always difficult - Commerzbank

Last Thursday, Turkey's central bank (CBT) surprised markets by raising its main policy rate from 42.5% to 46.0%. Simultaneously, it increased the overnight lending rate to 49%, and the overnight borrowing rate to 44.5%.
New
update2025.04.22 17:57

Gold price up over 10% in April, hits $3,500 on Fed spat turmoil

Gold price (XAU/USD) shows no signs of fatigue and extends its rally higher yet again, hitting another record high at $3,500 in early Asian trading on Tuesday.
New
update2025.04.22 17:52

JPY: Strong position - ING

The Japanese Yen (JPY) is the biggest winner in this latest round of USD selling, as it responds to both the equity slump and the risks of the Fed's independence.
New
update2025.04.22 17:50

GBP/JPY: Pound Sterling cross rates mixed at the start of the European session

Pound Sterling (GBP) crosses trade mixed at the start of Tuesday, according to FXStreet data. The Pound Sterling (GBP) to the Japanese Yen changes hands at 188.02, with the GBP/JPY pair declining from its previous close at 188.44.
New
update2025.04.22 17:50

JPY: Strength mainly vs. the USD - Commerzbank

The Japanese yen continued to strengthen against the US dollar over the holiday weekend, with the USD/JPY approaching 140 this morning.
New
update2025.04.22 17:48

USD: Confidence crisis extends - ING

US Dollar (USD) losses of the past few weeks have been a combination of mounting US growth concerns and a loss of confidence in the dollar as a safe haven. The round of USD weakness seen on Easter Monday belongs to both trends.
New
update2025.04.22 17:43

Dollar weakness due to threat to Fed independence - ING

The US president's attacks on Fed Chair Jay Powell are intensifying. And the dollar is weakening accordingly. The President of the United States is not well versed in conventional forms of politeness. We also know that he prefers a loose monetary policy.
New
update2025.04.22 17:38

WTI rises to near $63.50 due to covering short positions

West Texas Intermediate (WTI) Oil price retraces its recent losses from the previous session, trading around $63.30 per barrel during the European hours on Tuesday. The uptick in crude Oil prices came as investors took advantage of Monday's sharp sell-off to cover short positions.
New
update2025.04.22 17:30

Gold surges to fresh record high - ING

Gold surged to new record highs as President Trump threatened to fire US Federal Reserve Chair Jerome Powell, sparking a flight to safe-haven assets, ING's commodity experts Ewa Manthey and Warren Patterson note.
New
update2025.04.22 17:28

EUR/GBP today: Euro cross rates mixed at the start of the European session

Euro (EUR) crosses trade mixed at the start of Tuesday, according to FXStreet data.
New
update2025.04.22 17:27

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.

  • 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
Cancel