- Canadian Dollar is losing momentum with strong US macroeconomic data boosting Greenback.
- Canadian S&P Manufacturing PMI fails to support Loonie.
- The BoC's Consumer Expectations Survey shows a moderate improvement in the economic outlook.
The Canadian Dollar (CAD) has opened the week on its back foot against a somewhat stronger US Dollar. Upbeat US manufacturing activity data and the softer crude prices are weighing on the Loonie in a thin market session as most European markets are closed on the Monday following Easter. USD/CAD trades around 1.3580 mid-US afternoon as the poor performance of Wall Street undermines demand for commodity-linked currencies.
The US ISM Manufacturing index has shown levels above 50 for the first time since October 2022. These figures suggest an unexpected expansion of the sector’s activity in March and have been combined with improvements in all sub-indices with the prices component increasing at its fastest pace in almost two years, suggesting a positive contribution to inflation.
Earlier today, the Canadian S&P Manufacturing PMI remained little changed in March to complete a whole year of contraction in the sector’s activity. Apart from that, the Bank of Canada's Consumer Expectations Survey revealed that confidence in the economy has improved while inflation is expected to remain high.
Daily digest market movers: USD/CAD bounces up on bright US data
- Canadian Dollar trades lower on Monday with the US Dollar favoured by upbeat US macroeconomic data.
- US ISM Manufacturing PMI has increased to 50.3 in March from 47.8 in February, beating market expectations of a 48.4 reading.
- Prices Paid in the manufacturing sector have surged to 55.8, their highest level since July 2022.
- Canadian S&P Manufacturing PMI has ticked up to 49.8 from 49.7 in February.
- Oil prices have pulled back from YTD highs at $83.65, which has added negative pressure to the commodity-linked CAD.
- On Friday, US PCE Prices Index grew at a 0.3% monthly pace in February, 2.5% YoY. The market was expecting a 0.4% monthly increase.
- US Consumer spending jumped 0.8% in February from 0.2% in January, well above the 0.5% increase anticipated by market experts.
- This week a slew of Fed speakers are likely to give further hints regarding the monetary policy outlook ahead of Friday’s Nonfarm Payrolls report.
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.53% | 0.71% | 0.39% | 0.71% | 0.20% | 0.70% | 0.33% | |
| EUR | -0.53% | 0.19% | -0.13% | 0.19% | -0.33% | 0.16% | -0.20% | |
| GBP | -0.72% | -0.19% | -0.33% | 0.00% | -0.53% | -0.01% | -0.40% | |
| CAD | -0.39% | 0.14% | 0.31% | 0.32% | -0.20% | 0.30% | -0.08% | |
| AUD | -0.72% | -0.19% | 0.00% | -0.32% | -0.52% | -0.02% | -0.39% | |
| JPY | -0.21% | 0.35% | 0.51% | 0.20% | 0.54% | 0.50% | 0.12% | |
| NZD | -0.70% | -0.17% | 0.01% | -0.29% | 0.02% | -0.51% | -0.38% | |
| CHF | -0.33% | 0.21% | 0.40% | 0.08% | 0.40% | -0.12% | 0.38% |
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: The USD has scope for further appreciation to 1.3615
The USD/CAD regained positive traction on Monday, underpinned by the strong US macroeconomic data that endorses the “soft landing” rhetoric and opens cracks in the market view tat anticipates three rate hikes in 2024.
The pair keeps trading within a slightly bullish channel. The rebound from last week’s lows has breached resistance at 1.3565, which gives buyers hope to extend gains toward 1.3615 and the top of the channel at 1.3632. Supports are 1.3520 and 1.3470.
USD/CAD 4-Hour Chart
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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