The Canadian Dollar faced a day of uncertainty and fluctuation on Wednesday due to thin trading volumes during the holiday season. With many traders away, the Loonie struggled to find a clear direction against major currencies. The volatility was exacerbated by fluctuations in oil prices and ongoing global trade tensions, leaving investors unsure of the currency’s strength or weakness. In this analysis, we will delve into the factors influencing the Canadian Dollar’s performance on Wednesday and discuss the potential implications for traders and investors.
Canadian Dollar’s Mixed Performance:
The Canadian Dollar (CAD) displayed a mixed performance on Wednesday, settling lower against the US Dollar as Fedspeak continued to impact investor sentiment. The markets awaited key economic data releases scheduled for the latter part of the trading week.
Upcoming Economic Data Releases:
Thursday is set to bring US Durable Goods Orders, Preliminary Jobless Claims, and US Gross Domestic Product (GDP) figures. Following that, Friday will feature Canadian Month-over-Month GDP and US Personal Consumption Expenditure Price Index (PCE) inflation data for May.
Wholesale Trade Contraction:
Statistics Canada (Statscan) issued a warning about a potential contraction in wholesale trade activities in May, following a modest increase in April’s figures. The flash estimate from Statscan serves as a preview of the final data release scheduled for July 15.
Market Movers:
- Canadian Wholesale Sales are expected to have contracted by 0.9% in May, as per the Statscan flash estimate.
- A decline in upstream business activity may impact the upcoming Canadian GDP print on Friday, forecasted to rise to 0.3% Month-over-Month in April.
- US New Home Sales saw a decline of -11.3% Month-over-Month in May, marking the sharpest downward correction since July 2022.
- US Bank Stress Test results are awaited, along with the US GDP revision for the first quarter expected to remain stable at 1.3% Quarter-over-Quarter.
Current Canadian Dollar Exchange Rates:
The table below illustrates the percentage change of the Canadian Dollar (CAD) against major currencies today, showing strength against the Japanese Yen.
(Insert updated exchange rate table here)
the Canadian Dollar’s performance on Wednesday was characterized by volatility and uncertainty, influenced by various economic factors and global events. Traders and investors should closely monitor upcoming economic data releases and market developments to navigate the currency’s movements effectively.The warmth map displays the percentage changes of major currencies against each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Euro on the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the box will represent EUR (base)/JPY (quote).
Overview of Canadian Dollar Performance
On Wednesday, the Canadian Dollar (CAD) showed mixed results. It saw a slight increase of around four-tenths of a percent against the Japanese Yen and the New Zealand Dollar. However, it experienced a decrease of a third of a percent against the Australian Dollar and a quarter of a percent against the US Dollar.
The USD/CAD pair reached the 1.3700 level on Wednesday as the Canadian Dollar weakened against the Dollar. While the pair briefly hit a multi-week low earlier in the week, it returned to a familiar range.
In terms of technical analysis, the intraday price action is hovering around the 200-hour Exponential Moving Average (EMA) at 1.3692. Daily candlesticks have shown a short-term reversal, and the 50-day EMA at 1.3675 is providing technical support. The pair is currently consolidating above the 200-day EMA at 1.3582.
Factors Affecting the Canadian Dollar (CAD)
Bank of Canada’s Influence
The Bank of Canada (BoC) plays a crucial role in determining the value of the Canadian Dollar by setting interest rates. The BoC aims to maintain inflation between 1-3% by adjusting interest rates accordingly. Higher interest rates tend to be positive for the CAD, while quantitative easing and tightening can have varying effects on the currency.
Impact of Oil Prices
As Canada’s largest export, the price of oil directly affects the value of the Canadian Dollar. Generally, an increase in oil prices leads to a stronger CAD, as demand for the currency rises. Conversely, a decrease in oil prices can weaken the CAD.
Inflation and Economic Indicators
Inflation, which traditionally had a negative impact on currencies, can now lead to higher interest rates and increased capital inflows, strengthening the Canadian Dollar. Macroeconomic indicators such as GDP, employment data, and consumer sentiment surveys also influence the CAD’s direction. A robust economy is beneficial for the currency, attracting foreign investment and potentially leading to higher interest rates.
Disclaimer
The information provided here contains forward-looking statements and is intended for informational purposes only. It is not a recommendation to trade in any specific assets. Investors should conduct their own research before making investment decisions. FXStreet and the author do not guarantee the accuracy or timeliness of the information provided. Investing in financial markets carries risks, and individuals are responsible for their investment decisions.
