Canadian Dollar pares losses on Thursday but trims weight against Greenback


  • Canadian Dollar grapples with recovering US Dollar.
  • Canada remains absent from the economic calendar on Thursday.
  • CAD traders looking ahead to next Tuesday’s Canadian CPI inflation.

The Canadian Dollar (CAD) is broadly higher on Thursday, gaining ground across the board but still struggling under the weight of the US Dollar (USD) as the Greenback recovers from the previous day’s plunge. Mid-tier data had a limited impact, and Fedspeak is expected to dominate the headlines.

Canada delivered no economic data on Thursday and is expected to remain absent or strictly low-tier until next week’s Consumer Price Index (CPI) inflation release slated for next Tuesday. US data carried few surprises, with housing starts and new unemployment claims missing forecasts, but only by slim margins.

Daily market movers: Canadian Dollar battles Greenback as US data, Fedspeak dominate

  • US Initial Jobless Claims eased to 222K for the week ended May 10, stepping back from the previous week’s 232K (revised from 231K) but still undershot the 220K forecast.
  • US Housing Starts in April rose to 1.36 million MoM, above the previous 1.287 million (revised from 1.321 million) but below the forecast of 1.48 million.
  • Talking points from Fed policymakers to dominate the financial news cycle until higher-impact data approaches.
  • Federal Reserve Bank of Cleveland President Loretta J. Mester on Thursday:
    • I welcome recent CPI data as a sign of cooling inflation.
    • It will still take longer to gain confidence that inflation is moving toward 2%.
    • Risks to inflation side of Fed’s mandate have increased.
    • A strong economy means Fed is risking little to hold policy in place.

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 Swiss Franc.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.18% 0.13% 0.34% 0.12% 0.26% 0.06% 0.44%
EUR -0.18%   -0.04% 0.17% -0.05% 0.08% -0.09% 0.26%
GBP -0.13% 0.04%   0.22% 0.00% 0.13% -0.05% 0.30%
JPY -0.34% -0.17% -0.22%   -0.22% -0.08% -0.30% 0.11%
CAD -0.12% 0.05% -0.00% 0.22%   0.14% -0.06% 0.32%
AUD -0.26% -0.08% -0.13% 0.08% -0.14%   -0.20% 0.21%
NZD -0.06% 0.09% 0.05% 0.30% 0.06% 0.20%   0.37%
CHF -0.44% -0.26% -0.30% -0.11% -0.32% -0.21% -0.37%  

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: Canadian Dollar finds thin gains, but Greenback weighs

The Canadian Dollar (CAD) is broadly higher on Thursday but still struggling to make meaningful gains against the US Dollar. The CAD is up over half a percent against the Japanese Yen (JPY) and a third of a percent against the Swiss Franc (CHF). On the low side, the Canadian Dollar is weaker by about a tenth of a percent against the USD.

USD/CAD continues to churn near the 1.3600 handle as technicals swamp the pair near a familiar demand zone from 1.3660. The pair remains on the low side of the 200-hour Exponential Moving Average (EMA) at 1.3664. The Canadian Dollar tested a four-week high against the US Dollar on Thursday, dragging the USD/CAD pair down to 1.3590 before USD bids recovered into positive territory.

Despite slim topside gains for the Greenback, USD/CAD is battling near-term bearishness, trading south of the 50-day EMA at 1.3637. The pair is down -1.7% from the last swing high above 1.3840.

USD/CAD hourly chart

USD/CAD daily chart

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.

EUR/USD News

GBP/USD holds above 1.2650 following earlier decline

GBP/USD holds above 1.2650 following earlier decline

GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.

GBP/USD News

Gold climbs to multi-week highs above $2,400

Gold climbs to multi-week highs above $2,400

Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.

Gold News

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday. 

Read more

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.

Read more

Forex MAJORS

Cryptocurrencies

Signatures