Canadian Dollar churns on Monday, BoC CPI inflation around the corner – Crypto News – Crypto News
Connect with us
Despite CAD resilience this week, further weakness likely – Rabobank Despite CAD resilience this week, further weakness likely – Rabobank

others

Canadian Dollar churns on Monday, BoC CPI inflation around the corner – Crypto News

Published

1 year ago

on

  • Canadian Dollar mostly higher but flat against Greenback again.
  • Canada brings BoC CPI inflation to the table on Tuesday.
  • Fedspeak dominates headlines, CAD volumes thin on holiday Monday.

The Canadian Dollar (CAD) was broadly higher on Monday before a moderating pullback halfway through the American trading session. Momentum remains limited with Canadian markets shuttered for the Victoria Day holiday. CAD traders will officially kick the trading week off on Tuesday, just in time for the Bank of Canada’s (BoC) latest Consumer Price Index (CPI) inflation.

Canada is taking the day off, leaving Fedspeak the key market force on Monday as Federal Reserve (Fed) officials make a slew of appearances. Fed policymakers are walking a fine line between hawkish and bullish as the US central bank tries to balance sky-high market expectations for rate cuts with a mixed data outlook. The Fed remains concerned that inflation could remain a tricky problem to solve, but investors are adamant that the Fed is due for a first rate cut in September.

Daily digest market movers: Canadian Dollar finds room to grow, but limited against Greenback

  • Canadian Dollar recovers ground, but Greenback takes top spot on Monday, climbing higher and further.
  • Fed speakers flood the newswires on Monday, stressing the need for patience on rate moves with inflation expected by Fed staff to remain too high for too long.
  • Canada’s CPI inflation for the year ended April is expected to tick down to 2.7% from 2.9%.
  • The BoC’s own Core CPI inflation tracker last came in at 2.0% YoY.
  • Tuesday will feature even more Fed appearances, filling investors’ viewports.
  • Fed officials speak cautiously on policy outlook after April inflation 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 strongest against the New Zealand Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.03% -0.08% 0.30% 0.02% 0.28% 0.36% 0.02%
EUR -0.03%   -0.15% 0.31% -0.01% 0.28% 0.34% -0.01%
GBP 0.08% 0.15%   0.32% 0.14% 0.42% 0.47% 0.13%
JPY -0.30% -0.31% -0.32%   -0.29% -0.01% 0.08% -0.27%
CAD -0.02% 0.00% -0.14% 0.29%   0.22% 0.34% 0.00%
AUD -0.28% -0.28% -0.42% 0.01% -0.22%   0.05% -0.29%
NZD -0.36% -0.34% -0.47% -0.08% -0.34% -0.05%   -0.34%
CHF -0.02% 0.00% -0.13% 0.27% -0.00% 0.29% 0.34%  

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 high, but Greenback even higher

The Canadian Dollar (CAD) gained ground against nearly all of its major currency peers, but buying pressure evaporated, leaving the CAD in middle ground on Monday. On the low side, the CAD shed around a tenth of a percent against the market’s Monday top performers, the Pound Sterling (GBP) and the US Dollar (USD). 

USD/CAD continues to go sideways in the near term, treading choppy water between 1.3640 and the 1.3600 handle. Intraday price action remains hampered by the 200-hour Exponential Moving Average (EMA) at 1.3646.

Middling technical action threatens to bake into USD/CAD with daily candlesticks stuck between the 50-day and 200-day EMAs at 1.3635 and 1.3548, respectively. The 1.3600 handle remains a key technical barrier, acting as a magnet pulling down bullish momentum and a price floor hobbling further shortside progress.

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.

 

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending