USD/CAD trades cautiously near 1.4360 despite US Dollar gets temporary relief
- USD/CAD struggles to gain ground even though the US Dollar steadies on US President Trump's tariff agenda.
- The BoC cut its key borrowing rates by 25 bps to 2.75% on Wednesday.
- Trump tariffs have prompted Canadian economic risks.
The USD/CAD pair trades with caution around 1.4360 in Thursday’s European session. The Loonie pair faces mild pressure even though the US Dollar has gotten temporary relief after refreshing the four-month low, indicating some strength in the Canadian Dollar (CAD).
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 | 0.15% | 0.07% | -0.03% | 0.05% | 0.48% | 0.50% | 0.09% | |
| EUR | -0.15% | -0.08% | -0.15% | -0.12% | 0.33% | 0.37% | -0.07% | |
| GBP | -0.07% | 0.08% | -0.10% | -0.04% | 0.41% | 0.45% | 0.04% | |
| JPY | 0.03% | 0.15% | 0.10% | 0.05% | 0.50% | 0.53% | 0.14% | |
| CAD | -0.05% | 0.12% | 0.04% | -0.05% | 0.46% | 0.48% | 0.07% | |
| AUD | -0.48% | -0.33% | -0.41% | -0.50% | -0.46% | 0.04% | -0.35% | |
| NZD | -0.50% | -0.37% | -0.45% | -0.53% | -0.48% | -0.04% | -0.37% | |
| CHF | -0.09% | 0.07% | -0.04% | -0.14% | -0.07% | 0.35% | 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).
The CAD gained sharply after the Bank of Canada (BoC) reduced interest rates by 25 basis points (bps) to 2.75% on Wednesday. The BoC was already expected to ease the monetary policy further as Canadian inflation has remained well below the 2% target in the November-January period.
For fresh cues on inflation, investors will focus on the Consumer Price Index (CPI) data for February, which will be published on Tuesday.
The comments from BoC Governor Tiff Macklem indicated that central bank monetary policy has reached to the neutral level, which neither restrict nor stimulate domestic growth. “Our estimate of neutral is centred on 2.75%,” Macklem said in the press conference.
The BoC warned that heightened “trade tensions” could disrupt “job market recovery”, increase “increase inflationary pressures and curb growth” and guided a moderate growth in the January-March period as trade conflict weighs on “sentiment and activity”.
Meanwhile, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, strives to gain ground after posting a fresh four-month low around 103.20. The USD Index steadies as the market sentiment turns cautious after United States (US) President Donald Trump threatened to respond to counter tariffs proposed by the European Commission (EC).
In Thursday’s session, investors will focus on the US Producer Price Index (PPI) data for February, which will be published at 12:30 GMT.
Canadian Dollar FAQs
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.
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.
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.
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.
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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