- The USD/CAD bounces from the minimum of five months of 1,3828 on Monday.
- The president of the FED, Bostic, said that the US Central Bank still faces a long way to achieve its 2%inflation target.
- The 10 -year Canadian government bonus yield was reduced to 3.12% while investors reacted to the evolution of commercial dynamics and global uncertainties ongoing.
The USD/CAD stops its four -day loss streak, quoting around 1,3890 during the Asian hours on Tuesday. The torque advances slightly while the US dollar (USD) tries to stabilize amid growing concerns about stagflation. The operators will probably observe the data of the Consumer Price Index (CPI) of the BOC for March that will be published later in the day.
The president of the Atlanta Fed, Raphael Bostic, commented during the Tuesday morning market session that the US Central Bank still has a long way to go to achieve its 2%inflation target, which generates doubts about the expectations of the market of additional cuts of interest rates.
Deutsche Bank now predicts a 25 basic points cut in December – reputing its previous position of non -cuts in 2025 – two more cuts in the first quarter of 2026. The terminal rate is projected between 3.5% and 3.75%.
Meanwhile, the Canadian dollar (CAD), a risk -sensitive currency, received support as the market feeling improved after the announcement of the US president, Donald Trump, on tariff exemptions in select technological products – such as smartphones, laptops and other electronic. The measure helped relieve the fears of a broader economic slowdown amid the growing commercial tensions between the US and China.
The yield of the Canadian government bonus at 10 years fell to 3.12% on Tuesday, retreating a recent maximum of 3.27%, registered on April 11, while investors were adjusted to changing commercial dynamics and the persistent global uncertainties in line with the broader trends in the market.
Canadian dollar faqs
The key factors that determine the contribution of the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BOC), the price of oil, the main export product of Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canadian exports and that of its imports. Other factors are market confidence, that is, if investors bet on riskier assets (Risk-on) or seek safe assets (Risk-Off), being the positive risk-on CAD. As its largest commercial partner, the health of the US economy is also a key factor that influences the Canadian dollar.
The Canada Bank (BOC) exerts a significant influence on the Canadian dollar by setting the level of interest rates that banks can provide with each other. This influences the level of interest rates for everyone. The main objective of the BOC is to maintain inflation between 1% and 3% by adjusting interest rates to the loss. Relatively high interest rates are usually positive for CAD. The Bank of Canada can also use quantitative relaxation and hardening to influence credit conditions, being the first refusal for CAD and the second positive for CAD.
The price of oil is a key factor that influences the value of the Canadian dollar. Oil is the largest export in Canada, so the price of oil tends to have an immediate impact on the value of the CAD. Generally, if the price of oil rises, the CAD also rises, since the aggregate demand of the currency increases. The opposite occurs if the price of oil drops. The highest prices of oil also tend to give rise to a greater probability of a positive commercial balance, which also supports the CAD.
Although traditionally it has always been considered that inflation is a negative factor for a currency, since it reduces the value of money, the opposite has actually happened in modern times, with the relaxation of cross -border capital controls. Higher inflation usually leads to central banks to raise interest rates, which attracts more capital of world investors who are looking for a lucrative place to save their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
The published macroeconomic data measure 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 confidence surveys can influence the CAD direction. A strong economy is good for the Canadian dollar. Not only attracts more foreign investment, but it can encourage the Bank of Canada to raise interest rates, which translates into a stronger currency. However, if the economic data is weak, the CAD is likely to fall.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
