Select Language

Canadian Dollar heads for a sixth straight loss as Loonie falls under the Greenback wheel

Breaking news

Canadian Dollar heads for a sixth straight loss as Loonie falls under the Greenback wheel

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.08.01 04:40
Canadian Dollar heads for a sixth straight loss as Loonie falls under the Greenback wheel

update 2025.08.01 04:40

  • The Canadian Dollar shed further weight on Thursday as the US Dollar continues to climb.
  • Canadian GDP contracted again, pulling the rug out from beneath an already-battered Loonie.
  • The US Dollar is finding fresh bullish momentum from safe-haven flows as markets rebalance rate-cut expectations.

The Canadian Dollar (CAD) sank for a sixth consecutive session on Thursday, driven lower by a second straight contraction in headline Gross Domestic Product (GDP) growth on a monthly basis. Inflationary pressures and ongoing trade policy concerns on the US side are weighing on global risk appetite, bolstering the US Dollar (USD).

US Personal Consumption Expenditure Price Index (PCE) inflation ticked higher in June, a day after the Federal Reserve (Fed) threw cold water on September rate cut hopes on ongoing tariff and inflation concerns. US income figures also rose in June, adding further pressure to inflation expectations as price volatility factors get pushed higher from both the front and the back.

Daily digest market movers: Canadian Dollar sheds further weight as Greenback rebound extends

  • The Canadian Dollar fell for a sixth straight day against the US Dollar, briefly pushing USD/CAD back above 1.3850 for the first time since May.
  • Canadian GDP contracted by 0.1% MoM in June, the second contraction in a row as the Canadian economy continues to falter. Despite weakening economic data, the Bank of Canada (BoC) has its hands tied on interest rates, unable to cut any further as inflationary pressures remain elevated.
  • US PCE inflation also accelerated again in June, with core PCE inflation rising by 0.3% versus the previous 0.2%, and annualized PCE inflation also jumped to 2.8% with the previous period seeing a similar upside revision.
  • US Personal Income also rebounded 0.3% in June, putting further wage pressure on inflation metrics.
  • US NFP net job gains figures will round out a mismatched trading week on Friday.

Canadian Dollar price forecast

An extended Canadian Dollar backslide has pushed the USD/CAD pair back into the top end for the near-term, breaking above recent consolidation and laying the groundwork for an extended bullish push in Greenback flows. The pair is still stuck below the 200-day Exponential Moving Average (EMA) near 1.3900, and deeply overbought conditions in technical oscillators are flashing strong warning signs that USD strength could be heading for a breather.

USD/CAD daily chart


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

 : 2025.08.01

Update

Last updated

 : 2025.08.01

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

Dow Jones Industrial Average tries to recover from NFP plunge

The Dow Jones Industrial Average (DJIA) plummeted almost 2% top-to-bottom on Friday, falling over 800 points from Thursday's closing bids at its lowest point.
New
update2025.08.02 03:02

USD/JPY drops below 150 after soft US jobs data - Rabobank

For a number of hours leading to the softer than expected US July labour report, USD/JPY was back to trading above the 150.00 level for the first time since early April, Rabobank's FX analyst Jane Foley reports.
New
update2025.08.02 02:18

Silver rebounds after weak US jobs report fuels Fed rate cut speculation

Silver (XAG/USD) reverses early losses on Friday and climbs back above the $36.50 mark, buoyed by a broad-based sell-off in the US Dollar (USD) after the latest Nonfarm Payrolls (NFP) report surprised to the downside.
New
update2025.08.02 01:32

Fed's Bostic admits Fed is in a "difficult environment" as jobs data flashes warning signs

Federal Reserve (Fed) Bank of Atlanta President Raphael Bostic noted on Friday that the latest round of US Nonfarm Payrolls (NFP) jobs data, including revisions, is certainly cause for rate conversation at the Fed, but inflation metrics are still an ingoing concern, especially as the Trump administr
New
update2025.08.02 00:40

EUR/GBP soars to 0.8710 as US jobs disappoint, BoE rate cut in focus

The EUR/GBP rallied sharply on Friday as the Bank of England's (BoE's) next week's monetary policy decision looms, and a worse-than-expected Nonfarm Payrolls report in the United States (US), sparked talks about a possible "stagflation" scenario in the US.
New
update2025.08.02 00:27

NZD/USD bounces from two-month low as soft NFP data triggers US Dollar sell-off

The New Zealand Dollar (NZD) recovers from a two-month low on Friday as the US Dollar (USD) weakens broadly following a disappointing July Nonfarm Payrolls (NFP) report.
New
update2025.08.02 00:06

Fed's Hammack: Job market is still healthy and in balance but should be watched

In an interview with Bloomberg TV on Friday, Federal Reserve Bank of Cleveland President Beth Hammack noted that the July jobs data was disappointing, per Reuters.
New
update2025.08.01 23:37

Swiss Franc strengthens as USD stumbles on NFP shock

The Swiss Franc (CHF) strengthens against the US Dollar (USD) on Friday as the Greenback comes under heavy pressure following the release of the July Nonfarm Payrolls (NFP) report.
New
update2025.08.01 23:17

US ISM Manufacturing PMI fell to 48.0 in July

In July, the US manufacturing sector's economy lost some momentum. The ISM Manufacturing PMI dropped from 49.0 in June to 48.0, which was also lower than analysts' predictions of 49.5.
New
update2025.08.01 23:04

US Dollar Index slides to two-day lows on gloomy NFP

The Greenback, when tracked by the US Dollar Index (DXY), rapidly left behind the area of recent lows and slipped back to the vicinity of the 99.00 neighbourhood at the end of the week.
New
update2025.08.01 22:12

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