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- Canadian Dollar falls back as Crude Oil sags, US data misses the mark
Canadian Dollar falls back as Crude Oil sags, US data misses the mark
- The Canadian Dollar is getting dragged down by declining Crude Oil bids.
- Housing Starts in Canada tick upward, overshadowed by US unemployment figures.
- WTI Crude Oil slumps below $74 per barrel.
The Canadian Dollar (CAD) is getting pushed back into recent lows against the US Dollar (USD) as declining Crude Oil and softening risk appetites weighed on the Loonie.
Canada saw a welcome bump in annualized Housing Starts in October, but the figure was entirely overshadowed by a miss for US Initial Jobless Claims, which is dragging down market sentiment.
Daily Digest Market Movers: Canadian Dollar on the back foot with no support from Crude Oil
- US Initial Jobless Claims rise to their highest level in nearly two years, market narrative tilts back toward fears of a harder-than-soft landing.
- 231K new unemployment benefit claims are reported in the US for the week of November 10 versus forecast 213K; previous week revised from 217K to 218K.
- US Industrial Production also declined past forecast, printing at -0.6% for October against the forecast decline to -0.3%. September’s Industrial Production printed at just 0.1% after being revised down from 0.3%.
- Canadian Housing Starts for the year into October ticked upward, 274.7K new homes started construction, well over the expected 252.9K, climbing over September’s reading of 270.7K.
- Despite production cap quotas, OPEC member countries continue to export more oil than expected, sending Crude Oil lower on Thursday.
- West Texas Intermediate (WTI) Crude Oil is trading back down below $74.00/barrel, pulling the plug on CAD support in the markets.
- CAD: Limited scope for near-term gains – Scotiabank
Technical Analysis: Canadian Dollar bounces off 50-day SMA, USD/CAD sees rejection from rising trendline
The USD/CAD reclaimed the 1.3700 handle during Thursday trading, setting the pair up for a fresh run at 1.3800.
The early week’s declines saw the USD/CAD ease into a near-term low of 1.3654 before getting a clean bounce off of the 50-day Simple Moving Average (SMA) and a rising trendline drawn from July’s lows near 1.3100.
Long-term technical support comes from the 200-day SMA sitting near the 1.3500 handle. A bullish extension for the USD/CAD will see bidders looking to take another run at cracking the 1.3900 handle at November’s high bids.
USD/CAD Daily Chart
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 Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.04% | -0.03% | 0.64% | 0.71% | -0.39% | 0.82% | 0.13% | |
| EUR | -0.04% | -0.06% | 0.60% | 0.66% | -0.44% | 0.77% | 0.07% | |
| GBP | 0.03% | 0.07% | 0.68% | 0.73% | -0.36% | 0.85% | 0.15% | |
| CAD | -0.65% | -0.57% | -0.68% | 0.04% | -1.03% | 0.17% | -0.51% | |
| AUD | -0.70% | -0.66% | -0.74% | -0.05% | -1.10% | 0.11% | -0.59% | |
| JPY | 0.39% | 0.44% | 0.35% | 1.04% | 1.09% | 1.20% | 0.51% | |
| NZD | -0.81% | -0.76% | -0.85% | -0.15% | -0.11% | -1.21% | -0.69% | |
| CHF | -0.13% | -0.07% | -0.14% | 0.53% | 0.58% | -0.51% | 0.69% |
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).
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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