- The USD/CAD pair has fallen below 1.3600, which now ensures resistance.
- Israeli attack on Iran does not support the wider revival of the American dollar.
- The expectations of inflation in the USA are still falling, exerting pressure on the American dollar.
The canadian dollar (CAD) trads higher in relation to the US dollar (USD) in the American session on Friday, and Liono removes profits from earlier sessions.
At the time of writing, USD/CAD trades below 1.3600, and prices are currently testing the lowest levels for eight months.
Friday headlines were dominated by reports that Israel directed Iranian nuclear facilities and apartments, supposedly killing several older Iranian officials. This message briefly released USD/CAD from recent minima, although the couple soon slipped back, and the lower trend line of the wedge still persists.
Also on Friday, the University of Michigan published a preliminary study of consumer moods, showing a noticeable escalate in trust among households in the USA.
Meanwhile, both the annual and five -year inflation expectations of consumers have dropped lower, reflecting the readers of consumer price (CPI) and the manufacturer’s price index (PPI) at the beginning of the week.
The slowdown in inflation has increased the perspectives of the Federal Reserve (FED) in order to reduce interest rates, reducing the US profitability and weighed USD.
Technical analysis: USD/CAD drops below 1.3600, risky wedge support
USD/CAD is approaching support level 1.3588, which corresponds to the basic wedge pattern on a four -hour chart. This level has now become tiny -term resistance, contributing to the bears of the shoots.
The relative force indicator (RSI) is currently nearly 32, which indicates the bear and the approaching selling territory, although there is still potential for further declines.
If the bear’s rush persists, the price can reach a level of psychological support of 1.3500, potentially leading to a further decline towards the lowest level of 1.3472 October. On the other hand, if the price increases above 1.3588 and exceeds the level of psychological resistance of 1.3600, it can be an opportunity for USD/CAD bulls to re-test the 10-speed straight movable medium (SMA) to 1.3624.
Four -hour USD/CAD chart
fell below 1,3600, which now provides
Canadian Dollar Faq
The key factors that drive the Canadian dollar (CAD) are the level of interest rates set by Bank of Canada (BOC), oil price, the largest Canada export, economy health, inflation and commercial balance, which is the difference between the value of Canada exports compared to its import. Other factors include market moods-notterlessly from whether investors take more risky assets (risk), or are looking for secure havens (risk)-risk that is positive. As the largest commercial partner, the health of the American economy is also a key factor affecting the Canadian dollar.
Bank of Canada (BOC) has a significant impact on the Canadian dollar, determining the level of interest rates that banks can borrow. This affects the level of interest rates for everyone. The main goal of BOC is to maintain inflation of 1-3% by adjusting interest rates up or down. Relatively higher interest rates are usually positive for CAD. Bank of Canada can also operate quantitative alleviation and tightening to affect credit conditions, with former negative CAD and the second positive.
The price of oil is a key factor affecting the value of the Canadian dollar. Petroleum is the largest Canada export, so the price of oil tends to immediately affect the value of CAD. Basically, if the oil price also increases CAD, as the number of demand for currency increases. Otherwise, the price of oil will drop. Higher oil prices usually cause a greater probability of a positive trade balance, which also supports CAD.
While inflation has always been traditionally considered a negative factor of currency, because it reduces the value of money, on the contrary it was in state-of-the-art times with relaxation of cross -border capital control. Higher inflation tends to run central banks to determine interest rates, which attracts greater capital revenues of global investors looking for a lucrative place to maintain money. This increases the demand for the local currency, which in the Canadian case is the Canadian dollar.
Macroeconomic data release the health of the economy and may affect the Canadian dollar. Indicators such as GDP, PMI production and services, surveys on employment and consumer moods can affect the direction of CAD. A forceful economy is good for the Canadian dollar. It not only attracts more foreign investment, but can encourage Bank Canada to set interest rates, which leads to a stronger currency. However, if economic data is tender, the CAD will probably fall.
