USDCAD Forecast and News
USD/CAD drills weekly low near 1.3550 as Oil price recovers, US Dollar dribbles, PMIs eyed
USD/CAD holds lower ground at the weekly bottom as it extends the previous day’s fall amid a slightly upbeat risk profile and firmer Oil price, not to forget the sluggish US Dollar. The Loonie pair prints mild losses around 1.3565 by the press time of early Thursday morning in Europe.
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EUR/USD rebounds toward 1.0700 after EU inflation data
EUR/USD recovered toward 1.0700 despite soft inflation data from the Euro area, which revealed that the annual HICP rose 6.1% in May, compared to market expectation of 6.3%. The risk-positive market environment limits the USD's upside and helps the pair stretch higher ahead of key US data.
GBP/USD eases below 1.2450 amid a steady US Dollar, ADP eyed
GBP/USD is retreating from 1.2450 in the European morning, as the US Dollar looks to stabilize following the recent sell-off. Markets digest renewed dovish Fed expectations and US debt deal passage ahead of the top-tier US ADP jobs and ISM Manufacturing PMI data.
USD/JPY recovery stalls above 139.00, bull flag in the spotlight
USD/JPY picks up bids to refresh its intraday high near 139.50 as it prints the first daily gains in four during early Thursday. In doing so, the Yen pair recovers from the bottom line of a short-term bull flag formation. The RSI (14) line’s rebound from the below-50 region seems to underpin the USD/JPY pair’s latest recovery moves within the flag.
Gold: $1,970, looming US employment clues prod XAU/USD bulls
Gold price teases bears after keeping the buyers hopeful in the last two days, retreating from the weekly top of late. In doing so, the yellow metal justifies the market’s dicey conditions.
Oil bear pennant challenges buyers around mid-$68.00s
WTI crude oil consolidates the biggest weekly loss in three by printing minor upside near $68.50, making 1.10% intraday gains heading into Thursday’s European session. The black gold snaps two-day downtrend but stays within an immediate bear pennant chart formation suggesting further declines of the energy benchmark.
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 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 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
BOC NEWS & ANALYSIS
FED NEWS & ANALYSIS
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).