Canadian Dollar gains further ground as market flows continue to reverse

• The Canadian Dollar gained another 0.66% on Friday.
• Market flows are reversing out of the Greenback, pushing Loonie bids higher.
• BoC rate call due next week, markets wait to see if BoC will continue to deliver last-minute rate cuts.

The Canadian Dollar (CAD) rose on Friday, jumping two-thirds of a percent against the US Dollar as global market flows continue to reverse out of the safe haven Greenback. Trade war pressures have been relieved somewhat after the Trump administration pivoted away from its own lopsided "reciprocal" tariffs following a last-minute 90-day delay, opting for a 10% across-the-board replacement tariff. Coupled with 145% import fees on all goods from China, trade war tensions will keep investors with one eye on geopolitical headlines for the foreseeable future.

The Bank of Canada (BoC) is set to deliver its latest rate call next week, and key Canadian Consumer Price Index (CPI) inflation figures are also due next Tuesday. The pressure is on for the BoC as markets await to see if they will hold off on rate changes for the time being after a long-run series of rate cuts, or if BoC Governor Tiff Macklem will try to squeeze one more rate slash in before economic impacts from US tariffs begin to take hold on the Canadian economy.

Daily digest market movers: Canadian Dollar climbs on Greenback weakness

• The Canadian Dollar rose to a 22-week high against the US Dollar on Friday.
• Tariff and trade war tensions remain elevated, but markets continue to tilt back into risk appetite regardless.
• Key US data showed a further decline in US Producer Price Index (PPI) inflation in March, but tariffs could cut that progress short.
• US consumer sentiment figures have also collapsed, and US consumers also expect both near-term and long-term inflation to soar, also thanks to tariffs.
• Canadian CPI inflation is due next Tuesday, which could inform the BoC's next rate call, slated for next Wednesday.

Canadian Dollar price forecast

The Canadian Dollar's 0.66% gain on Friday has dragged USD/CAD to a weekly loss of 2.3%, and accelerated the pair into its fifth-straight week-on-week loss as the Loonie gets bolstered by a general weakening in Greenback market demand. USD/CAD has smashed through the 200-day Exponential Moving Average (EMA) at 1.4072, putting the pair on pace for extended declines.

On the bullish side, technical oscillators are flashing oversold warning signs on USD/CAD as the pair explores multi-month lows below the 1.3900 handle. Near-term price action is at risk of running aground on old technical swing points priced in between 1.3800 and 1.3900 through the two middle quarters of 2024.

USD/CAD daily chart