The Canadian Dollar (CAD) trades marginally higher against its major currency peers in the Asian trading session on Friday. The USD/CAD pair ticks down to near 1.3735 in an attempt to regain ground after a sharp underperformance on Thursday, which was driven by weakness in the Oil price, but is still close to its over two-week high of 1.3748.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.20% | 0.12% | 0.28% | -0.07% | 0.06% | -0.13% | 0.05% | |
| EUR | -0.20% | -0.08% | 0.09% | -0.26% | -0.13% | -0.33% | -0.14% | |
| GBP | -0.12% | 0.08% | 0.19% | -0.19% | -0.06% | -0.25% | -0.06% | |
| JPY | -0.28% | -0.09% | -0.19% | -0.34% | -0.23% | -0.41% | -0.21% | |
| CAD | 0.07% | 0.26% | 0.19% | 0.34% | 0.12% | -0.06% | 0.13% | |
| AUD | -0.06% | 0.13% | 0.06% | 0.23% | -0.12% | -0.19% | -0.00% | |
| NZD | 0.13% | 0.33% | 0.25% | 0.41% | 0.06% | 0.19% | 0.19% | |
| CHF | -0.05% | 0.14% | 0.06% | 0.21% | -0.13% | 0.00% | -0.19% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Given that Canada is the largest exporter of oil to the United States (USD), the scenario of a correction in the oil price weighs on the Canadian Dollar.
WTI oil price has retraced sharply to near $92.50 after failing to return above $100 as US President Donald Trump has told Israeli Prime Minister Benjamin Netanyahu not to repeat attacks on Iranian energy infrastructure, Reuters reports. Trump also clarified that he was not aware that Tel Aviv would be launching attacks on the South Pars gas field, which is the world’s largest gas field.
In addition to that, signs of readiness from European nations and Japan to contribute to unblocking passage if energy products through the Strait of Hormuz have also weighed on the oil price.
This week, the Canadian Dollar remained heavily volatile amid the Bank of Canada’s (BoC) monetary policy announcement on Wednesday, in which it left interest rates unchanged at 2.25%.
In Friday’s session, investors will focus on the Canadian Retail Sales data for January, which will be published at 12:30 GMT. Month-on-Month Retail Sales are estimated to have grown 1.5% after declining 0.4% in DECEMBER.
Meanwhile, the US Dollar (USD) gains slightly after a sharp sell-off on Thursday. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is up 0.2% to near 99.35. On Thursday, the USD Index declined over 1% to near 99.00.
The US Dollar came under pressure after monetary policy announcements by the Bank of Japan (BoJ), the Bank of England (BoE), and the European Central Bank (ECB), in which they delivered a hawkish commentary on the interest rate outlook, which diminished fears of policy divergence with the Federal Reserve (Fed).
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge 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 sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
