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- Canadian Dollar holds firm on Thursday, recovers against Greenback
Canadian Dollar holds firm on Thursday, recovers against Greenback
- Canadian Dollar is broadly higher in calm markets.
- Canada Unemployment, Average Hourly Wages due on Friday.
- Canadian Dollar in tight race with recovering US Dollar.
The Canadian Dollar (CAD) has stepped broadly higher against the majority of its major currency peers on Thursday, though the CAD is battling a recovering US Dollar (USD) as the two currencies are on pace to settle the day as the top performers. US Initial Jobless Claims came in lower than expected, driving investors back into the Greenback as the US economy continues to outperform.
Canada sees a clear economic docket on Thursday as investors gear up for Friday’s Canadian labor and wages figures. Markets are forecasting a slight uptick in the Canadian January Unemployment Rate, as well as a smaller-than-usual Net Change in Employment for January, though the number is still projected to be positive.
Daily digest market movers: Canadian Dollar fighting for second place on Thursday
- US Initial Jobless claims beat expectations, coming in at 218K for the week ended February 2 compared to the forecast of 220K.
- The previous week’s Initial Jobless Claims saw an upside revision from 224K to 227K.
- The 4-week average for US Initial Jobless Claims climbed to 212.25K from 208.5K (revised up from 207.75K).
- President of the Federal Reserve (Fed) Bank of Richmond, Thomas Barkin, noted on Thursday that Fed Chairman Jerome Powell speaks for the Federal Open Market Committee (FOMC).
- Fed’s Barkin won’t prejudice the outcome of the March FOMC meeting, deferring to Fed head Powell’s statements.
- More Barkin:
- The Fed is focused on inflation and unemployment, not US government debt.
- If the US economy takes a turn for the worse, that would be a rate cut scenario.
- The Fed has time to be patient on rate cuts.
- Economic data remains remarkable, but Barkin is cautious regarding accuracy.
- It’s entirely possible that the neutral rate has risen.
- Need to see good inflation numbers being sustained and broadening.
- Canada’s Friday Unemployment Rate for January is forecast to tick upward to 5.9% from December’s 5.8%.
- Net Change in Employment forecast to add 15K net job gains through January, a thin number but still positive.
- Canadian annualized Average Hourly Wages in January will also print on Friday, last annualized wage growth figure showed YoY hourly wage gains of 5.7%.
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 Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.12% | 0.15% | 0.00% | 0.55% | 0.91% | 0.38% | 0.05% | |
| EUR | -0.12% | 0.03% | -0.11% | 0.43% | 0.78% | 0.26% | -0.09% | |
| GBP | -0.15% | -0.03% | -0.14% | 0.40% | 0.76% | 0.23% | -0.12% | |
| CAD | -0.01% | 0.10% | 0.14% | 0.54% | 0.89% | 0.37% | -0.02% | |
| AUD | -0.56% | -0.44% | -0.41% | -0.54% | 0.36% | -0.17% | -0.53% | |
| JPY | -0.90% | -0.81% | -0.76% | -0.91% | -0.38% | -0.52% | -0.87% | |
| NZD | -0.37% | -0.27% | -0.24% | -0.37% | 0.18% | 0.53% | -0.36% | |
| CHF | -0.03% | 0.09% | 0.10% | -0.02% | 0.53% | 0.87% | 0.35% |
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: Canadian Dollar rebounds against US Dollar on Thursday
The Canadian Dollar is broadly higher on Thursday, gaining nine-tenths of a percent against the Japanese Yen (JPY) and over half a percent against the Australian Dollar (AUD). On the low end, the CAD is mostly flat against the US Dollar after recovering from an early dip, and it is up a scant tenth of a percent against the Euro (EUR).
The USD/CAD saw a sharp turnaround just below 1.3500 on Thursday as investors aren’t ready to push the pair back over the key price handle. The pair is currently finding technical support from the 200-hour Simple Moving Average (SMA) near 1.3450, and an extended breakdown puts the USD/CAD on the road to re-challenging early February’s swing lows into 1.3370.
Daily candles remain caught in the midrange of a consolidation zone between the 50-day and 200-day SMAs at 1.3423 and 1.3476, respectively, but the USD/CAD is still up over 2% from December’s bottom bids of 1.3177.
USD/CAD hourly chart
USD/CAD daily chart
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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