- USD/CAD moves higher to almost 1.3760, when the American dollar reflects from signs of progress in the US-EU trade agreement.
- The EU asked its domestic companies to provide details of investment plans in the USA.
- Investors are waiting for the Canadian R1 GDP data on Friday before the Boc monetary policy is announced next week.
The USD/CAD pair gains almost 1.3760 in European commercial hours on Tuesday. The Loon pair increases when the American dollar (USD) is gaining on the basis of deester trade tensions between the European Union (EU) and the United States (USA).
The American dollar index (DXY), which assesses the Greenback value compared to the six main currencies, jumps to almost 99.35 from the monthly lowest level 98.70 published on Monday.
In European commercial hours, the Reuters report showed that EU officials asked BLOC companies share the details indicating their investment plans in the USA. It was stated that the continent was trying to speed up the progress to close the trade agreement with the USA.
On Monday, commercial tensions between the EU and the US were also reduced, and the expectations that both economies would reach a potential bilateral agreement increased after the comments of the European Commissioner for Trade Maros Sefcovic in X, in which he stated that the EU Commission was “fully involved in constructive efforts towards the EU agreement.” “We are still maintaining constant contact,” he added.
Although the Canadian dollar (CAD) is worse in relation to the American dollar, it trades higher in relation to other main peers in European commercial hours on Tuesday.
Canadian dollar price today
The table below shows a percentage change in the Canadian dollar (CAD) compared to the stock exchange main currencies. The Canadian dollar was the strongest to Japanese yen.
| USD | EUR | GBP | JPy | BOOR | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.21% | 0.89% | 0.18% | 0.65% | 0.85% | 0.75% | |
| EUR | -0.37% | -0.18% | 0.49% | -0.19% | 0.21% | 0.38% | 0.36% | |
| GBP | -0.21% | 0.18% | 0.70% | -0.01% | 0.37% | 0.56% | 0.49% | |
| JPy | -0.89% | -0.49% | -0.70% | -0.68% | -0.24% | -0.11% | -0.14% | |
| BOOR | -0.18% | 0.19% | 0.01% | 0.68% | 0.45% | 0.59% | 0.51% | |
| Aud | -0.65% | -0.21% | -0.37% | 0.24% | -0.45% | 0.09% | 0.03% | |
| NZD | -0.85% | -0.38% | -0.56% | 0.11% | -0.59% | -0.09% | -0.10% | |
| CHF | -0.75% | -0.36% | -0.49% | 0.14% | -0.51% | -0.03% | 0.10% |
The heat map shows percentage changes in the main currencies towards each other. The basic currency is collected from the left, and the quote currency is collected from the upper order. For example, if you choose a Canadian dollar on the left column and move along the horizontal line to the American dollar, the percentage shift displayed in the field will represent CAD (Base)/USD (quote).
This week, Loon’s main trigger will be Q1 and the March gross domestic product (GDP), which will be published on Friday. It is expected that the Canadian economy has increased at a moderate pace of 1.6% on an annual basis, compared to the previously reported 2.6%. Next week, investors will pay special attention to the decisions of the interest rates of Bank Canada (BOC).
FAQ in American dollars
The American dollar (USD) is the official currency of the United States of America and the “de facto” currency of a significant number of other countries where it is in circulation with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.
The most essential single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will escalate the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.
In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan dehydrated, because the banks will not borrow (for fear of the contractor). This is the last last, when just lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.
Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and will not reinvest from the bonds that it has in modern purchases. This is usually positive for the American dollar.
