- Canadian Dollar is broadly higher on Friday but only slightly.
- Canada missed forecasts on manufacturing and wholesale figures.
- US Consumer Sentiment survey dominates news flow in American session.
The Canadian Dollar (CAD) found a thin recovery on Friday, gaining ground against most of its major currency peers and clawing back a scant tenth of a percent against the US Dollar (USD). Market sentiment has continued to drag throughout Friday's US session, pulling the CAD into middling bids against the Greenback. A missed forecast in Canadian Manufacturing Sales was broadly brushed off, and an unexpected backslide in the University of Michigan’s (UoM) Consumer Sentiment is throwing a cautionary wrench in market sentiment to wrap up the trading week.
Manufacturing and Wholesale Sales in Canada saw a milder recovery from recent contractions than expected, but market sentiment is largely focused elsewhere after the UoM Consumer Sentiment Index fell to a six-month low, and 5-year Consumer Inflation Expectations ticked higher in June.
Daily digest market movers: Canadian Dollar grinds out thin gains despite forecast miss
- Canadian Manufacturing Sales rebounded 1.1% MoM in April, slightly missing the forecast 1.2% and recovering from the previous month’s revised -1.8%.
- Wholesale Sales recovered 2.4% over the same period but missed the expected 2.8%. Wholesale Sales provided a firmer recovery from the previous -1.3%, which was also revised slightly lower from -1.1%.
- UoM Consumer Sentiment Index unexpectedly declined in June, falling to 65.6 after markets expected a climb to 72.0 from the previous 69.1. The backslide represents the key sentiment indicator’s worst print in six months.
- UoM 5-year Consumer Inflation Expectations also rose in June, climbing to 3.1% from the previous 3.0%. According to the UoM’s consumer survey, spender expectations of future inflation have climbed to their second-highest level since the covid pandemic era.
- Coming up next week, Canadian data continues to play second fiddle, restricted to mid-tier releases at best throughout the week. US Retail Sales will be a key print on Tuesday.
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.60% | 0.24% | -0.06% | 0.31% | 0.43% | -0.33% | |
| EUR | -0.30% | 0.30% | -0.07% | -0.37% | -0.01% | 0.12% | -0.62% | |
| GBP | -0.60% | -0.30% | -0.36% | -0.66% | -0.28% | -0.17% | -1.02% | |
| JPY | -0.24% | 0.07% | 0.36% | -0.31% | 0.08% | 0.20% | -0.63% | |
| CAD | 0.06% | 0.37% | 0.66% | 0.31% | 0.38% | 0.48% | -0.38% | |
| AUD | -0.31% | 0.01% | 0.28% | -0.08% | -0.38% | 0.12% | -0.75% | |
| NZD | -0.43% | -0.12% | 0.17% | -0.20% | -0.48% | -0.12% | -0.85% | |
| CHF | 0.33% | 0.62% | 1.02% | 0.63% | 0.38% | 0.75% | 0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Technical analysis: Choppy trading continues to plague Canadian Dollar
The Canadian Dollar (CAD) is broadly higher on Friday, brushing off a half-percent decline against the Swiss Franc (CHF) to rise six-tenths of one percent against the Pound Sterling (GBP) and four-tenths of a percent against the Euro (EUR) and New Zealand Dollar (NZD). The CAD is scrambling to hold onto near-term gains against the US Dollar, trading within a tenth of a percent of Friday’s opening bids.
USD/CAD climbed to the 1.3780 region on Friday before slipping back to familiar territory below 1.3740. The pair continues to trade above the 200-hour Exponential Moving Average (EMA), but volatility remains high. Consolidation continues to weigh on daily candlesticks, though USD/CAD has managed to trade on the north side of the 200-day EMA at 1.3575 since early April.
Near-term momentum leans in favor of the bears as sellers look set to drag USD/CAD back down to the 50-day EMA at 1.3670 unless renewed buying pressure pushes the pair back above June’s peak bids near 1.3790.
USD/CAD hourly chart
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
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