- Canadian Dollar falls back, while US Dollar moves broadly higher.
- Canada International Merchandise Trade fell further than expected, Building Permits also declined.
- Crude Oil market recovery sees friction, limiting CAD support.
The Canadian Dollar (CAD) extended declines on Tuesday, slipping to a new low for the week as market sentiment recoils in the last quarter of the trading day. Markets pulled back into the US Dollar (USD), pushing the CAD even lower as Canadian economic figures broadly miss the mark.
Canada’s International Merchandise Trade in November fell back after October’s 14-month high, and Canadian Building Permits in November fell by nearly 4%.
Crude Oil is looking for a rebound from Monday’s downside slump, but topside momentum remains limited, leaving Crude Oil largely flat on the week as barrel bids struggle to recover.
Daily digest market movers: Canadian Dollar hesitates amidst US Dollar recovery
- Canada trade balance heads back toward the median: November’s International Merchandise Trade Balance slid from October’s 14-month peak of CAD 3.2 billion to 1.57 billion, with October seeing an upside revision from 2.97 billion.
- Canada Building Permits also fell more than expected in November, declining 3.9% versus the forecast of -1.7%.
- October’s Building Permits grew by 3% after an upside revision from 2.3%.
- The US trade deficit fell less than expected with the Goods Trade Balance for November bouncing slightly from a slightly-revised -90.3 billion to -89.4 billion.
- November’s US Goods and Services Trade Balance likewise fell less than expected, reaching $-63.2 billion versus the forecast of $-65.0 billion. October saw a minor revision from $-64.3 billion to $-64.5 billion.
- Market focus will be squarely on Thursday’s US Consumer Price Index (CPI) inflation print, where headline CPI inflation is expected to rise to 3.2% YoY in December.
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 Australian Dollar.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.16% | 0.24% | 0.30% | 0.45% | 0.12% | 0.20% | 0.42% | |
EUR | -0.16% | 0.08% | 0.14% | 0.27% | -0.05% | 0.04% | 0.25% | |
GBP | -0.25% | -0.08% | 0.05% | 0.16% | -0.13% | -0.05% | 0.18% | |
CAD | -0.30% | -0.14% | -0.05% | 0.13% | -0.19% | -0.11% | 0.12% | |
AUD | -0.44% | -0.26% | -0.17% | -0.11% | -0.30% | -0.22% | -0.01% | |
JPY | -0.12% | 0.07% | 0.13% | 0.19% | 0.32% | 0.07% | 0.31% | |
NZD | -0.19% | -0.04% | 0.05% | 0.10% | 0.24% | -0.08% | 0.23% | |
CHF | -0.42% | -0.26% | -0.18% | -0.12% | 0.01% | -0.30% | -0.23% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical Analysis: Canadian Dollar gives up further ground on Tuesday as markets pick up the Greenback
The Canadian Dollar (CAD) slid to a new multi-week low against the US Dollar on Tuesday, sending the USD/CAD pair briefly back over the 1.3400 price level before intraday price action got hung up on the major handle. Near-term USD/CAD momentum has largely been a consolidation story with the pair grinding out higher lows through 2024’s early trading.
Daily candlesticks show the USD/CAD pushing steadily higher in choppy trading as the pair grinds back toward the 200-day Simple Moving Average (SMA) near the 1.3500 handle. Bullish momentum is set to see a fresh technical ceiling from an impending bearish crossover of the 50-day and 200-day SMAs.
USD/CAD Hourly Chart
USD/CAD Daily Chart
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
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