The Canadian Dollar (CAD) found a fresh wave of weakness on Thursday, tipping into a fresh five-month low against the US Dollar (USD) as Loonie traders find few reasons to bid up the battered CAD. US jobs data would typically take the pride of place as this week’s dominant data release on Friday. However, the US government’s latest shutdown has forced the Bureau of Labor Statistics (BLS) to hold off on publishing official datasets until federal operations restart.
The Bank of Canada (BoC) released its latest Meeting Minutes this week, and CAD traders are keenly aware that the Canadian central bank is increasingly caught in a two-way trap: the Canadian economy is tilting further toward recession, but inflation pressures still remain too high to give the BoC the room it needs to sharply draw down interest rates to support the economy after blowing through most of its powder following its recent seven-straight rate cut run.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.26% | 0.10% | 0.23% | 0.26% | -0.14% | 0.08% | |
| EUR | -0.10% | 0.15% | 0.00% | 0.11% | 0.14% | -0.13% | -0.04% | |
| GBP | -0.26% | -0.15% | -0.12% | -0.07% | 0.02% | -0.27% | -0.17% | |
| JPY | -0.10% | 0.00% | 0.12% | 0.12% | 0.14% | -0.35% | -0.01% | |
| CAD | -0.23% | -0.11% | 0.07% | -0.12% | 0.02% | -0.22% | -0.14% | |
| AUD | -0.26% | -0.14% | -0.02% | -0.14% | -0.02% | -0.34% | -0.18% | |
| NZD | 0.14% | 0.13% | 0.27% | 0.35% | 0.22% | 0.34% | 0.25% | |
| CHF | -0.08% | 0.04% | 0.17% | 0.00% | 0.14% | 0.18% | -0.25% |
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).
Daily digest market movers: Canadian Dollar continues to grind lower
- The Canadian Dollar was one of the worst-performing currencies on Thursday, shedding nearly one-quarter of one percent against the Greenback.
- USD/CAD has been bolstered into its highest intraday bids since early May, and the pair is inching toward 1.4000.
- The Canadian Dollar has lost ground against the US Dollar for all but two of the last 12 straight trading days.
- This week’s US Nonfarm Payrolls (NFP) jobs report was slated to be a heavy-hitter as markets look for signs of further Federal Reserve (Fed) interest rate cuts.
- The US government shutdown has forced the BLS to warn that official datasets may have to be suspended or delayed as a matter of policy, although market reporting suggests the latest NFP jobs report is already completed and ready for publication.
Canadian Dollar price forecast
USD/CAD is trading near 1.3965 after testing 1.4016 overnight, following a recent break above the 200-day Exponential Moving Average (EMA) near 1.3850. The move caps a series of higher lows since early September, with momentum strong and the Relative Strength Index (RSI) still shy of overbought.
The 1.3850–1.3900 zone now acts as key support, with upside focus on the 1.4000–1.4050 band and May highs near 1.4200 if momentum continues.. A daily close back below 1.3850 would risk a false breakout, but for now price action signals an ongoing slow-motion bullish grind higher.
USD/CAD daily chart
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.
