USDCAD Forecast and News
USD/CAD holds positive ground near 1.3500, USD attracts buyers
USD/CAD gains traction near the 1.3500 psychological mark amid the renewed USD. The pair holds below the 50- and 100-hour EMAs; Relative Strength Index (RSI) stands in bullish territory above 50. The first resistance level is seen at 1.3510; the initial support level is located at 1.3465.
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EUR/USD stays depressed near 1.0650 on sustained US Dollar strength
EUR/USD is consolidating losses near 1.0650 in the European trading hours on Thursday. The Fed kept rates unchanged but indicated one more rate hike before the year-end. US yields sit at multi-year highs, underpinning the US Dollar ahead of data.
GBP/USD remains heavy below 1.2300 after BoE hits the pause button
GBP/USD remains under heavy selling pressure below 1.2300 in the European session on Thursday. The BoE unexpectedly held rates steady at 5.25% after its September meeting. Odds of a November hike fall amid the UK's soft inflation and grim economic outlook.
USD/JPY holds steady above 148.00, bulls have the hand near YTD peak
The USD/JPY pair surges above the 148.00 mark after bouncing off the 147.47 low during the early Asian trading hours on Thursday. The upside in the US Dollar (USD) is bolstered by the hawkish stance of the Federal Reserve (Fed) following Wednesday’s policy meeting. The pair is trading at 148.41, up 0.05% on the day.
Gold falls to $1,920 ahead of US data
Gold price is holding lower ground near $1,920 in the European session on Thursday. Investors seem to shift their focus on upcoming US data after the US Federal Reserve's hawkish hold on Wednesday triggered a fresh US Dollar rally.
WTI drops to $88.80, near a weekly low amid the Fed's hawkish remarks
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $88.80 so far on Thursday. WTI prices face some follow-through selling to nearly a weekly low of 88.60 after the Federal Reserve (Fed) held the interest rate unchanged and delivered hawkish comments on Wednesday.
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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).