- Canadian Dollar sees further downside as Loonie loses oil support.
- Canada Building Permits also slid to a five-month low.
- Loonie down a full percent for the week.
The Canadian Dollar (CAD) is extending the week’s decline, getting pushed down as broader markets favor the US Dollar (USD) and Crude Oil bids decline into four-month lows.
Last week’s rally into the close fueled by investors heralding the end of the Federal Reserve’s (Fed) rate hike cycle is hitting a wall this week, and elation is being replaced with trepidation as fears of a global economic slowdown and ongoing geopolitical concerns weigh on risk appetite.
Daily Digest Market Movers: Canadian Dollar heading back for the bottom as investors extend Greenback bets
- CAD set for a third consecutive down day, backsliding 1.25% from Monday’s high bids.
- Broad-market USD pickup is seeing the Loonie get pushed back down after a brief recovery from 13-month lows.
- Canadian Building Permits declined 6.5% MoM in September, erasing August’s print of 4.3% (revised upward from 3.4%).
- Canada Housing Starts next week will round out the housing development picture.
- Bank of Canada Senior Deputy Governor Carolyn Rogers to speak about financial stability at an Advocis event in Vancouver on Thursday.
- The CAD is losing fundamental support as risk aversion flows pick up the US Dollar and West Texas Intermediate (WTI) Crude Oil fumbles barrel bids.
- WTI Crude Oil down over 9% from November’s high.
Technical Analysis: Canadian Dollar heading back into the floorboards, sees 1.38 against US Dollar
The USD/CAD has returned to the 1.3800 handle in Wednesday trading as the pair eases back, extending Greenback gains into a third straight day.
After seeing a technical bounce from the 50-day Simple Moving Average (SMA) near 1.3630 in confluence with a soft touch of the rising trendline from July’s low bids near 1.3100, the USD/CAD is set for a fresh challenge of 13-month highs at the 1.3900 handle. Multi-year highs remain locked behind 2022’s October peak of 1.3978.
Long-term trend technical support sits at the 200-day SMA currently rising into 1.2500, far below price action, and indicator traders will note that the Moving Average Convergence-Divergence (MACD) oscillator is still flashing short-side warnings after confirming a signal moving average crossover last week.
USD/CAD Daily Chart
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the Euro.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.06% | 0.07% | 0.33% | 0.36% | 0.33% | 0.30% | -0.06% | |
EUR | 0.06% | 0.13% | 0.40% | 0.41% | 0.40% | 0.36% | -0.01% | |
GBP | -0.04% | -0.12% | 0.28% | 0.30% | 0.27% | 0.24% | -0.10% | |
CAD | -0.34% | -0.41% | -0.28% | 0.02% | 0.00% | -0.05% | -0.40% | |
AUD | -0.36% | -0.42% | -0.30% | -0.02% | -0.02% | -0.05% | -0.43% | |
JPY | -0.34% | -0.40% | -0.30% | 0.02% | 0.00% | -0.06% | -0.39% | |
NZD | -0.30% | -0.36% | -0.22% | 0.03% | 0.06% | 0.04% | -0.36% | |
CHF | 0.06% | 0.00% | 0.12% | 0.39% | 0.42% | 0.39% | 0.36% |
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).
US Dollar FAQs
The US 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 found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Credit: Source link