Created
: 2025.08.27
- English
- English
- What's Myforex
- Share
- Use tools
- Get information
- What's New
- Help center
- About us
- Customer support
- Terms and policies
-
-
PortfolioShare your portfolio and performance in real time -
Events & contestsEvents and contests held by retail brokers around the world
-
-
Real-time spread comparisonCompare spreads of major retail brokers in real time -
Volatility analysisVisualize volatility as a measure of daily market activity -
Swap point comparisonCompare buy and sell swap values for each broker by symbol -
Market rates & chartsCheck prices for all instruments offered by each broker -
IndicatorsProviding in-house developed indicators for MT4/MT5 -
Trading calculatorsCalculation tools for each broker to help you trade
-
-
World FX newsLatest news on forex and cryptocurrencies from around the world -
Broker informationTrading information of retail brokers worldwide -
MetaTrader4/5 user guideUser guide collection for the latest MetaTrader4/5 -
Economic calendarRelease calendar for indicators from official sources of major economies
USD/CAD weakens below 1.3850 amid renewed concerns over Fed's independence
World FX news
Breaking news
USD/CAD weakens below 1.3850 amid renewed concerns over Fed's independence
2025.08.27 08:05
2025.08.27 08:05
- USD/CAD softens to around 1.3835 in Wednesday's early Asian session.
- Trump said he'll have a Fed majority soon to push rates lower.
- Traders raise their bets that the BoC would deliver a rate reduction at the next policy decision.
The USD/CAD pair loses ground to near 1.3835 during the early Asian session on Wednesday. The US Dollar (USD) weakens against the Canadian dollar (CAD) amid fears over the Federal Reserve's (Fed) independence after US President Donald Trump announced he was firing a Fed Governor Lisa Cook.
Trump said on Tuesday that he will soon have a "majority" of his own nominees on the Fed board of governors who will back his desire to cut the interest rates. These comments came hours after he took the unprecedented move to fire Fed Governor Lisa Cook. In response, Cook said Trump has no authority to fire her from the central bank, and she will not resign. Trump's decision to fire Cook renewed concerns over the central bank's independence and exerted some selling pressure on the Greenback.
Trump also once again criticized Fed Chair Jerome Powell for not lowering interest rates, although he has stopped issuing threats to fire him ahead of the end of his term in a little under nine months. According to CME's FedWatch tool, traders are now pricing in nearly an 85% chance of a rate cut at the Fed's next meeting.
Meanwhile, a rise in crude oil prices might support the commodity-linked Loonie and create a headwind for the pair. It's worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.
Financial market believes the Bank of Canada (BoC) would deliver a rate reduction at the next policy decision in September after data last week showed a sharp deceleration in 3-month annualized measures of underlying inflation that are closely watched by the Canadian central bank. Dovish tone from the BoC could drag the CAD lower and cap the downside for the pair.
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.
Last updated
: 2025.08.27
Related articles
NZD/USD slumps below 0.5950 as New Zealand's economy shrinks more than expected in Q2
2025.09.18 00:00GBP/USD: BoE has tough act to follow after Fed cuts rates
2025.09.17 23:32USD/JPY rebounds above 146.50 as Fed cuts rate for first time this year
2025.09.17 23:18AUD/USD drops on Fed's hawkish cut, Aussie jobs data eyed
2025.09.17 23:07EUR/CHF slides as Euro struggles post-inflation data
2025.09.17 22:05Australia unemployment rate expected to remain unchanged at 4.2% in August
2025.09.17 21:30
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
NZD/USD slumps below 0.5950 as New Zealand's economy shrinks more than expected in Q2
The NZD/USD pair falls to near 0.5935 during the early Asian session on Thursday. The weaker-than-expected New Zealand Gross Domestic Product (GDP) exerts some selling pressure on the Kiwi against the US Dollar (USD).
New
2025.09.18 00:00GBP/USD: BoE has tough act to follow after Fed cuts rates
GBP/USD surged into its highest bids in eleven weeks on Wednesday, bolstered by a spat of broad-market Greenback weakness after the Federal Reserve (Fed) delivered its first interest rate cut of the year, and the dot plot shifted lower to incorporate more rate cuts in the future than the previous Fe
New
2025.09.17 23:32USD/JPY rebounds above 146.50 as Fed cuts rate for first time this year
The USD/JPY pair recovers some lost ground around 146.80 during the early Asian session on Thursday. The US Dollar (USD) bounces off the six-week lows near the 146.00 neighborhood after the Federal Reserve (Fed) cut interest rates by a quarter of a percentage point.
New
2025.09.17 23:18AUD/USD drops on Fed's hawkish cut, Aussie jobs data eyed
The Australian Dollar reversed course on Wednesday, tumbled over 0.48% as the Greenback staged a recovery following the Fed's decision to cut rates by 25 basis points. Although it usually would be negative for the Dollar, the AUD/USD fell from around 0.6707 to current levels at around 0.6652.
New
2025.09.17 23:07EUR/CHF slides as Euro struggles post-inflation data
The Euro (EUR) trades under pressure against the Swiss Franc (CHF) on Wednesday, with EUR/CHF extending losses for the second straight session as the common currency struggles to gain traction following Eurozone inflation data.
New
2025.09.17 22:05Australia unemployment rate expected to remain unchanged at 4.2% in August
Australia will release its August monthly employment report on Thursday at 1:30 GMT, and market participants anticipate yet another month of moderate growth in the labor market.
New
2025.09.17 21:30When is the New Zealand GDP, and how could it impact NZD/USD?
The latest quarterly Gross Domestic Product (GDP) growth figures from New Zealand are expected just ahead of the Thursday market rollover, at 22:45 GMT on Wednesday.
New
2025.09.17 20:38Forex Today: The BoE is seen holding its policy rate
The US Dollar (USD) challenged the area of multi-week troughs before attempting a marked bounce, ending the day with decent gains as investors assessed the interest rate cut by the Federal Reserve.
New
2025.09.17 19:55Fed's dot plot signals 50 basis points of additional rate cuts in 2025; GDP revised up
The Federal Open Market Committee's (FOMC) latest dot plot indicates that interest rates will average 3.6% by the end of 2025, below the June projection of 3.9%.
New
2025.09.17 18:56Silver price today: Silver falls, according to FXStreet data
Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data.
New
2025.09.17 18:34Disclaimer:
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.
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
