Canadian Dollar ekes out a small gain with Canada & US GDP, US PCE inflation figures looming ahead

  • The Canadian Dollar is grappling with sideways momentum on Monday.
  • Markets look ahead to key data for both the US and Canada in the latter half of the week.
  • US PCE inflation & ISM Manufacturing, Canada GDP & employment change are on the horizon.

The Canadian Dollar (CAD) middled against the US Dollar (USD) in Monday trading, leaning into the top side to make a late break higher, closing up one-tenth of a percent on the day. Markets are set for a calmer start to the week before high-impact figures for both the US and Canada begin to print in the back half of the trading week.

Loonie traders will be keeping an eye on Gross Domestic Product (GDP) growth figures from Canada on Thursday, with November’s Canadian Net Change in Employment slated for Friday. 

On the USD side of the economic calendar, broader markets will see the FX space driven by US Core Personal Consumption Expenditures (PCE) price inflation on Thursday, as well as US ISM Manufacturing Purchasing Managers Index (PMI) figures on Friday.

Daily Digest Market Movers: Canadian Dollar treads water as markets take a breather before the mid-week data calendar gets underway

  • Monday sees flat action on the Canadian Dollar side as investors await headlines or a change in underlying momentum.
  • Loonie traders look ahead to Thursday’s Canadian GDP growth, markets expect a rebound to 0.2% annualized growth after the previous quarter’s -0.2% print.
  • Canadian data releases to be overshadowed by US figures this week, the main focus will be US PCE inflation numbers for October, expected to show a slight decline in inflation price growth from 3.7% to 3.5% for the annualized period into October.
  • US PCE inflation to print alongside Canadian GDP figures at 13:30 GMT on Thursday.
  • Friday sees Canadian wages and labor figures alongside November’s US ISM Manufacturing PMI.
  • The trading week will cap off with a late Friday appearance from Federal Reserve (Fed) Chairman Jerome Powell, due to participate in a “fireside chat” labeled "Navigating Pathways to Economic Mobility" at Atlanta’s Spelman College.

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 US Dollar.

USD   -0.13% -0.22% -0.11% -0.38% -0.62% -0.35% -0.20%
EUR 0.13%   -0.08% 0.02% -0.24% -0.49% -0.21% -0.07%
GBP 0.22% 0.08%   0.10% -0.16% -0.41% -0.14% 0.01%
CAD 0.11% -0.02% -0.10%   -0.27% -0.51% -0.24% -0.09%
AUD 0.38% 0.24% 0.16% 0.26%   -0.25% 0.03% 0.18%
JPY 0.62% 0.49% 0.33% 0.51% 0.24%   0.30% 0.43%
NZD 0.35% 0.22% 0.13% 0.24% -0.03% -0.29%   0.14%
CHF 0.20% 0.07% -0.01% 0.09% -0.17% -0.42% -0.14%  

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Technical Analysis: Canadian Dollar grinds sideways but leaning towards the top end as markets await a spark in the headlines

The Canadian Dollar (CAD) is caught in a tight range between 1.3660 and 1.3630 against the US Dollar (USD) for Monday’s trading window, but testing on the low side towards 1.3620 heading into the back half of the trading day.

The USD/CAD is currently capped by the 50-hour Simple Moving Average (SMA) descending into 1.3665, with intraday support currently priced in at the day’s lows near 1.3620.

Near-term bullish momentum will see a technical ceiling at the 200-hour SMA drifting into the 1.3700 handle, and rallies could see bidders getting caught in a short squeeze, though a topside break of last Friday’s peak of 1.3712 will see a shift in the lower-highs pattern.

On the daily candlesticks, the USD/CAD remains trapped under the 50-day SMA, and the pair is drifting toward the median at the 200-day SMA, just north of the 1.3500 handle.

USD/CAD Hourly Chart

USD/CAD Daily Chart

Canadian Dollar FAQs

What key factors drive the Canadian Dollar?

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.

How do the decisions of the Bank of Canada impact 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.

How does the price of Oil impact the Canadian Dollar?

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.

How does inflation data impact the value of the Canadian Dollar?

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.

How does economic data influence the value of 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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