- USD / CAD is negotiated in negative territory nearly 1.3855 during the Asian session on Thursday.
- Concerns about a hot air balloon deficit deficit on the US dollar.
- Advanced S&P reports Global Manufacturing and PMI services will be monitored on Thursday.
The USD / CAPA pair extends its drawback to around 1.3855 during the first Asian session Thursday, under pressure by a lower US dollar (USD). Investors await the advanced reports of S&P Global Manufacturing and Services that PMI later reports Thursday, followed by the national index of activities of Chicago Fed, initial complaints of usual unemployment and sales of existing houses.
The theme of the “Sell America” ​​investment continues to undermine the greenback and slide the pair with a two -week hollow. Wednesday, the White House put pressure on the Republicans, urging legislators to quickly approve the bill on the signature of President Donald Trump, adding that a non-compliance with this would be “ultimate betrayal”.
“The results of the disappointing auction … correspond to the account of the weakening of demand for American assets and a profession of” sale in America “in the midst of tax concerns,” said Kim Rupert, general director of fixed income securities at Action Economics in San Francisco.
On the other hand, a drop in crude oil prices could undermine the huard linked to basic products and create a rear wind for the pair. It should be noted that Canada is the largest oil exporter to the United States, and the drop in crude oil prices tends to have a negative impact on CAD value.
Canadian dollar FAQ
The key factors at the origin of the Canadian dollar (CAD) are the level of interest rate set by the Bank of Canada (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and trade balance, which is the difference between the value of exports of Canada compared to its imports. Other factors include the feeling of the market – that investors have more risky assets (risk) or are looking for safety havens (risk) – with the risk for the positive CAD. As the most important trading partner, the health of the American economy is also a key factor influencing the Canadian dollar.
The Bank of Canada (BOC) has a significant influence on the Canadian dollar by fixing the level of interest rate that banks can lend each other. This influences the level of interest rate for everyone. The main objective of the BOC is to maintain inflation to 1 to 3% by adjusting increased or declining interest rates. Relatively higher interest rates tend to be positive for CAD. The Bank of Canada can also use a quantitative softening and tightening to influence credit conditions, with the old cad-negative and the last positive frame.
The price of oil is a key factor with an impact on the value of the Canadian dollar. Oil is the largest export in Canada, so the price of oil tends to have an immediate impact on CAD value. Generally, if the price of oil increases, the CAD also increases, because the overall demand for money increases. The reverse is the case if the price of oil decreases. The higher oil prices also tend to lead to a greater probability of a positive trade balance, which also supports CAD.
Although inflation has always been considered a negative factor for a currency because it reduces the value of money, the reverse was in fact the case in modern times with the relaxation of cross -border capital controls. A higher inflation tends to lead central banks to set up interest rates that attract more capital entries from global investors looking for a lucrative place to keep their money. This increases demand for local currency, which in the case of Canada is the Canadian dollar.
Macroeconomic data versions assess the health of the economy and may have an impact on the Canadian dollar. Indicators such as GDP, Manufacturing and PMIS services, employment and surveys on consumer feelings can all influence CAD management. A strong saving is good for the Canadian dollar. Not only does it attract more foreign investment, but it can encourage the Bank of Canada to install interest rates, which leads to a stronger currency. If the economic data is low, however, CAD is likely to decrease.
Market players will have an eye on the publication of PMI American reports, which should be due later on Thursday. In the case of a stronger result than expected, this could raise the USD against the Canadian dollar (CAD) in the short term.
