Canadian Dollar holds in place, ends Wednesday mostly flat as markets focus on US data


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  • The Canadian Dollar takes another step higher following Tuesday’s gains.
  • Business and intermediary sales in Canada see slight recovery.
  • Loonie gains get capped by declining Crude Oil bids.

The Canadian Dollar (CAD) is seeing additional gains on Wednesday, eking out an extension as broader markets chew on their recent bout of risk-on sentiment.

Wholesale and business sales figures in Canada saw an improvement over forecasts, helping to bolster the Loonie. Meanwhile, declines in Crude Oil prices are keeping CAD gains on a tight leash.

Daily Digest Market Movers: Canadian Dollar easing higher as Loonie bulls squeeze out a little more

Loonie steps into second-straight day of gains against the US Dollar (USD).
Canadian Manufacturing Sales in September beat the street, printing at 0.4% against the -0.1% forecast, but slipping back from August’s 1.0% (revised up from 0.7%).
Wholesale sales for September softened significantly but still beat flat forecast to print at 0.4%, down from the previous month’s 1.8% (revised down from 2.3%).
US data didn’t quite meet the street’s expectations as Retail Sales for October declined from a revised 0.9% in September to -0.1%, contracting but still holding above forecast -0.3%.
Annualized US Core Producer Price Index (PPI) Ex Food & Energy for the year into October also came in below expectations, printing at 2.4% against the forecast of 2.7%.
Crude Oil is seeing some declining prices on Wednesday, limiting CAD gains.
Thursday brings Canadian Housing Starts and changes in employment insurance benefits recipients.

Technical Analysis: Canadian Dollar looking to round out additional topside gains against the Greenback

Hope for an additional day of gains for the Canadian Dollar (CAD) against the US Dollar (USD) is bringing the USD/CAD back down from the 1.3700 handle, but momentum is draining quickly as Wednesday trading wraps up. The pair tested support barriers near 1.3650, and technical indicators are leaning toward the downside.

The USD/CAD is seeing some back-and-forth movement on the intraday level as the pair tests the 50-day Simple Moving Average (SMA) sitting just north of 1.3650. A break of this level will open up the door for a deeper bear run toward the 200-day SMA at the 1.3500 handle.

The Relative Strength Index (RSI) has crossed into the bottom half of the 50.0 line, inching toward oversold conditions, but there’s still plenty of room left to run in the indicator.

Wednesday’s additional declines in the USD/CAD sets the pair up for a firm break of a rising trendline, though rejection from here would set the Loonie on the path for a return to losses.

USD/CAD Daily Chart

Canadian Dollar price this week

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the US Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -1.46% -1.52% -0.84% -2.27% -0.06% -2.21% -1.58%
EUR 1.44%   -0.05% 0.61% -0.80% 1.38% -0.74% -0.11%
GBP 1.50% 0.05%   0.67% -0.74% 1.43% -0.67% -0.07%
CAD 0.85% -0.60% -0.65%   -1.40% 0.79% -1.33% -0.72%
AUD 2.24% 0.79% 0.74% 1.38%   2.16% 0.08% 0.67%
JPY 0.06% -1.40% -1.45% -0.79% -2.20%   -2.12% -1.52%
NZD 2.16% 0.72% 0.67% 1.33% -0.07% 2.04%   0.60%
CHF 1.56% 0.12% 0.07% 0.72% -0.68% 1.50% -0.61%  

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).

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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