Canadian Dollar hesitates on Wednesday after wholesale trade estimate teases decline
- Canadian Dollar gave a mixed performance, easing against the Greenback.
- Canada reported a potential contraction in wholesale trade in May.
- Fedspeak to continue dominating headlines until high impact data late in the week.
The Canadian Dollar (CAD) is mixed on Wednesday, giving a mediocre performance and settling lower against the US Dollar as Fedspeak continues to weigh on investor focus. Markets await a slew of key economic figures due in the back half of the trading week.
US Durable Goods Orders, Initial Jobless Claims, and US Gross Domestic Product (GDP) figures all slated for Thursday. Friday will follow up with Canadian MoM GDP and US Personal Consumption Expenditure Price Index (PCE) inflation for the month of May.
Statistics Canada (Statscan) warned of a contraction in wholesale trade activities in May, which follows a moderate increase in April’s figures. The Statscan flash estimate is a preview of the final figure that will be published on July 15.
Daily digest market movers: Canadian Dollar churns on Wednesday, eases against Greenback
- Canadian Wholesale Sales likely contracted by 0.9% in May, according to a Statscan flash estimate.
- A decline in upstream business activity will put renewed pressure on Friday’s upcoming Canadian GDP print, which is forecast to rise to 0.3% MoM in April after the previous 0.0%.
- US New Home Sales in May also declined on Wednesday, coming in at -11.3% MoM. This is the sharpest downside correction since July 2022 as housing activity remains subdued.
- US Bank Stress Test information is due later on Wednesday.
- Markets look ahead to Thursday’s US GDP revision for the first quarter, which is expected to hold steady at 1.3% QoQ.
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.22% | 0.41% | 0.26% | -0.09% | 0.61% | 0.61% | 0.21% | |
| EUR | -0.22% | 0.19% | 0.04% | -0.31% | 0.41% | 0.40% | 0.00% | |
| GBP | -0.41% | -0.19% | -0.16% | -0.49% | 0.22% | 0.20% | -0.16% | |
| CAD | -0.26% | -0.04% | 0.15% | -0.34% | 0.37% | 0.36% | -0.02% | |
| AUD | 0.09% | 0.30% | 0.48% | 0.34% | 0.71% | 0.71% | 0.35% | |
| JPY | -0.62% | -0.41% | -0.22% | -0.38% | -0.71% | -0.01% | -0.41% | |
| NZD | -0.62% | -0.40% | -0.21% | -0.36% | -0.72% | 0.03% | -0.37% | |
| CHF | -0.24% | -0.02% | 0.17% | 0.02% | -0.32% | 0.39% | 0.39% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical analysis: Canadian Dollar slumps back to 1.3700 against Greenback
The Canadian Dollar (CAD) was mixed on Wednesday. It rose around four-tenths of one percent against the Japanese Yen and the New Zealand Dollar. However, it shed a third of a percent against the Australian Dollar and backslid a quarter of a percent against the US Dollar.
USD/CAD rose to the 1.3700 handle on Wednesday as the Canadian Dollar recedes against the Greenback. The pair briefly set a multi-week low this week before returning to a familiar congestion zone.
Intraday price action is hung up on the 200-hour Exponential Moving Average (EMA) at 1.3692, and daily candlesticks have snapped a near-term losing streak. The 50-day EMA at 1.3675 provides technical support, and the pair continues to grind out a medium-term consolidation pattern north of the 200-day EMA at 1.3582.
USD/CAD hourly chart
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.
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