USD/CAD Forecast and News


USD/CAD: 21-day EMA defends bears’ attacks on 1.3600

USD/CAD remains depressed despite the latest bounce off 1.3595. The loonie pair remains on the back foot for the second day while testing 21-day EMA. The quote earlier refreshed the monthly high to 1.3646 on Tuesday but failed to cross 50-day EMA.

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USD/CAD Bullish Themes

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SPECIAL WEEKLY FORECAST

USD/CAD Weekly Forecast: Moderate risk-aversion is not panic

The USD/CAD saw its second weekly rise in June as rising virus cases in the US and elsewhere prompted a return to the dollar and a moderate risk-premium.  

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EUR/USD hits four-month high of 1.1423

EUR/USD prints a four-month high of 1.1423 in Asia. The pair witnessed a bullish breakout above 1.1349 on Tuesday. The pair closed well above 1.1349 on Tuesday, invalidating the bearish lower high setup created on the daily chart on June 23.

EUR/USD News

GBP/USD: Bulls breaking up through critical 4HR structure, blue skies on horizon

GBP bulls taking over and seeking out a break from key support. Blue skies are on the horizon, but there is plenty of leg work to do yet. The pound has been one of the best-performing G10 currencies of late.

GBP/USD News

USD/JPY: All eyes on BOJ to extend run-up past-107.00

USD/JPY refreshes the intraday high following a U-turn from 107.15. Increasing hopes of virus vaccine follow Wall Street's performance to recall the bulls. News that Tokyo will raise the pandemic to the highest levels, fears of an escalation in the US-China tussle challenge sentiment.

USD/JPY News

Gold: Daily chart shows temporary uptrend exhaustion

Gold's daily chart shows a bearish divergence of the MACD, a sign of uptrend exhaustion. A break below the 10-day SMA could prove costly. The metal looks vulnerable to price pullback.

Gold News

WTI: Prints another pullback from $41.00

WTI takes a U-turn from $41.08 to mark fifth failure to stay beyond the $41.00 threshold. 21-day EMA, a three-week-old support line restrict immediate downside. June month high, 200-day EMA offers strong resistance.

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ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE USD/CAD

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 USD/CAD. 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.

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.

BOC NEWS & ANALYSIS

FED NEWS & ANALYSIS


About USD/CAD

THE 'LOONIE'

The USD/CAD pair tells the trader how many Canadian dollars (the quote currency) are needed to purchase one U.S. dollar (the base currency). The 'Loonie' is a gold-coloured coin that was introduced in 1987 and is produced by the Royal Canadian Mint at its facility in Winnipeg.
The most prevalent versions of the coin show a common loon, a bird found throughout Canada, on the reverse and Queen Elizabeth II, the nation's head of state, on the obverse

THE IMPORTANCE OF OIL FOR THE LOONIE

The USD/CAD is one of the three so-called “commodity pairs”, together with the following ones: AUD/USD, NZD/USD. These pairs are highly correlated to commodity (especially oil) fluctuations.

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.
Gonçalo Moreira explains the correlations that exist between oil, the USD and the CAD: "If Canada is one of the world's largest producers of oil and oil is such a big part of the US economy, rising oil prices tend to have a negative effect on the USD and a positive effect on the CAD. Here you have two nice correlations.” Then he continues his analysis: “If you are willing to find a pair which is really sensitive to oil prices, then pick the CAD/JPY. Canada and Japan are at the extreme ends of production and consumption of oil. While Canada benefits from higher oil prices, Japan's economy can suffer because it imports nearly all of the oil it consumes. This is another interesting correlation to follow."

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).