USD/CAD NEWS (US DOLLAR CANADIAN DOLLAR)


USD/CAD: Seesaws between 61.8% Fibonacci retracement, 100-day EMA

USD/CAD drops from the intraday high of 1.3785 amid the initial hour of Tokyo trading on Friday. The pair retreats from 100-day EMA but stays above 61.8% Fibonacci retracement level of February-March upside. Even so, the bearish MACD and a failure to carry the bounce off 1.3728 favors the sellers.

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SPECIAL WEEKLY FORECAST

USD/CAD Forecast: The market half-life of a pandemic

The USD/CAD has been poised for a breakdown for almost two months but so far traders have been unwilling to completely abandon the US dollar’s risk-premium and send the loonie back its pre-pandemic levels of February and March.

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EUR/USD breaks above 1.1100 amid EU hopes, US-Sino tensiosn

EUR/USD has hit a new two-month high above 1.11, amid hopes for a fiscal boost in Europe, and as growing Sino-American tensions seem to weigh on the dollar for a change. EZ inflation, US data, Trump's China speech, and end-of-month flows are in play.

EUR/USD News

GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 

GBP/USD News

USD/JPY drops to near 2-week lows amid escalating US-China tensions

USD/JPY comes under some heavy selling pressure amid worsening US-China relations. The downfall confirms a stiff resistance near 50-day SMA, just ahead of the 108.00 mark. Friday’s key focus will be on Trump’s response to China’s security law for Hong Kong.

USD/JPY News

Gold pokes $1,721/23 resistance area

Gold prices extend the latest recovery from $1,711 as DXY refreshes two-month low. A confluence of 10-day EMA, nine-day-old falling trend line probes immediate upside. An ascending trend line from April 21 favors the bulls.

Gold News

WTI struggles to cheer USD weakness, drops 1.40% in Asia

WTI probes gradual declines from $34.34, still eyes record monthly advances. DXY bears the burden of risk aversion wave before US President Trump’s China conference. Fears of US-China restrict the black gold’s near-term upside.

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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 Stephen Poloz.
  • 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.

Stephen S. Poloz

Stephen S. Poloz was appointed Governor of the Bank of Canada, effective 3 June 2013, for a term of seven years. As Governor, he is also Chairman of the Board of Directors of the Bank and a member 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.

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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).