USDCAD Forecast and News
Canadian Dollar climbs further against the US Dollar after Canada adds more jobs than expected
The Canadian Dollar is testing higher ground in Friday trading, climbing once more against its largest peer, the US Dollar, after Canadian employment figures handily trounced market expectations. The Canadian Dollar is one of the top-performing currencies for the week, having gained a full percent against the US Dollar from Monday’s opening bids.
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EUR/USD bounces back, trades above 1.0860
EUR/USD bounced from a fresh weekly low of 1.0827, as the US Dollar lost steam following a weak ISM Manufacturing PMI report and words from Federal Reserve Chair Jerome Powell. Powell reiterated its hawkish message, dismissing potential rate cuts in the near future.
GBP/USD turns north ahead of the weekly close, approaches 1.2700
GBP/USD extended its rebound from near 1.2600 and is approaching 1.2700 on the back of a weaker US Dollar. The Greenback accelerated to the downside following comments from Fed’s Powell.
USD/JPY picks up on higher US yields, 148.70 is a key resistance
The US Dollar trims losses and approaches resistance at 148.70. Higher US yields are supportring the USD ahead of Powell's speech. Hopes of some BoJ monetary policy normalisation in 2024 are expecte to underpin the Yen.
Gold resumes advance and approaches record highs
Gold remains near record highs and achieved its highest monthly close ever in November. Global bond yields continue to decline as inflation further cools, supporting the upside in XAU/USD. With central banks expected to remain on hold, the focus will be US labor market data.
Oil heading back down once again after WTI sees a sharp rejection from $76.50
West Texas Intermediate Crude Oil is seeing a choppy session during Friday’s late-week trading, climbing back towards $77.00 per barrel before falling once more towards $74.50 as oil markets whip.
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USDCAD YEARLY FORECAST
How could USDCAD move this year? Our experts make a USDCAD update forecasting the possible moves of the Canadian dollar-US dollar pair during the whole year. Don't miss our 2023 USDCAD forecast!
USDCAD FORECAST 2023
The policy divergence between the Bank of Canada and the US Fed could continue to drive USD/CAD’s action in 2023. After raising its policy rate by 25 basis points to 4.5% following the January policy meeting, the BoC announced that it is likely to hold the rate at this level while assessing the impact of cumulative rate hikes.
On the other hand, the Fed left the door open for multiple rate hikes in 2023 as it remains concerned about wage inflation causing price pressures to remain uncomfortably high throughout the year.
2023 OUTLOOK FOR USDCAD
Both central banks reiterated that they will be prepared to adjust the policy depending on the developments surrounding inflation and labor market conditions. As things currently stand in early 2023, the respective policy outlooks of the BoC and the Fed favor USD/CAD bulls. It’s worth noting, however, that the commodity-sensitive Canadian Dollar could stay resilient against its American counterpart in case oil prices continue to rise. The west’s sanctions against Russia and the Organization of the Petroleum Exporting Countries’ (OPEC) willingness to use the output strategy to limit oil’s downside could support energy prices in 2023.
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE USDCAD
In Canada, the organizations and people that affect the most the moves of the pair are:
- Bank of Canada (BoC, Canada’s Central bank) that issues statements and decides on the interest rates of the country. Its president is Tiff Macklem.
- Canadian Government and its Department of Finance that implement policies that affect the economy of the country.
- CAPP (Canadian Association of Petroleum Producers): Canada being a prominent oil and natural gas producer, the trade organization of that industry is very important.
In the USA, we have:
- The US Government: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it, in this case, the Canadian Dollar.
- Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
In terms of economic data, we should highlight the Trade Account Balance, a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the USDCAD. If a steady demand in exchange for CAD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the CAD.
Inflation is another economic value that is important for this pair. It is measured among others by the CPI (Core Price Index) and the PPI (Production Price Index). They are key indicators to measure inflation and changes in purchasing trends.
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
Tiff Macklem
Tiff Macklem was born in Montréal, Quebec, in 1961. He was appointed Governor of the Bank of Canada, effective 3 June 2020, for a seven-year term. He is the tenth governor of the Bank of Canada. As Governor, he is also Chairman of the Board of Directors of the Bank for International Settlements (BIS). He currently chairs both, the BIS Audit Committee and the Consultative Council for the Americas.
Macklem on BOC'S Profile and Wikipedia
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About USDCAD
THE 'LOONIE'
THE IMPORTANCE OF OIL FOR THE LOONIE
Canada is commonly known as a resource based economy being a large producer and supplier of oil. The leading export market for Canada is by far the United States making its currency particularly sensitive to US consumption data and economical health.
ASSETS THAT INFLUENCE USD/CAD THE MOST
- Commodities: as we already explained, oil is number one, but gold and natural gas are also to be taken into account by the traders.
- Currencies: JPY and EUR. Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, an NZD/USD.
- Bonds: CSB (Canada Savings Bonds), CPB (Canada Premium Bond).
- Indices: S&P/TSX Capped Composite Index (the headline index for the Canadian equity market), S&P/TSX Global Gold Index (index of global gold securities) and S&P/TSX Capped Energy Index (benchmarks for related derivative products of Canadian economic sectors).