- The dollar is trading near 1.3945, and it extends on Friday and distinguishes its fourth consecutive session of the gains.
- The United States raises – China Trade is global risk morale, and Greenback’s support.
- The markets are waiting for US CPI data on Tuesday, federal reserve comments, and broader macro updates.
The US dollar (USD) is trading top against the Canadian dollar (CAD) at the beginning of the week, with the support of the appetite of renewable risks in the wake of a trade agreement for the United States, the expectation of the different interest rates, and the expectation of the main US economic data.
At the time of this report, the US dollar/CAD is trading around 1.3945, and keeps the ups off from Friday.
The United States – Cina stop stopping the feelings and supports the US dollar
Risk morale improved after Chinese officials agreed to stop for a period of 90 days on a new tariff, and reduce pressure on global supply chains and fears of economic slowdown in the short term.
While Canada does not participate directly in the agreement, development has strengthened global demand expectations and strengthening the US dollar by enhancing market confidence.
The commercial truce also strengthened the expectations that the Federal Reserve (Fed) will maintain its restricted political position for a longer period, especially since inflation is still higher than the target and continued the flexibility of the labor market.
The main US data and speakers are speaking to direct the dollar direction/CAD
This week provides a thick calendar for the macroeconomic economy that can form the trend of the dollar/CAD. On Tuesday, all attention will be in the US Consumer Price Index report in April (CPI).
The markets expect a 0.3 % increase in the mother in both the main address and the basic CPI, where YOY numbers are expected to remain fixed at 2.4 % and 2.8 %, respectively.
While the consumer price index is decisive inputs of the FBI policy, it is part of a broader narration. Expectations will also be formed through comments from many federal reserve officials, most notably President Jerome Powell, who is scheduled to speak on Thursday. His remarks will follow the previous comment from the conservatives, Er, Jefferson and Dali earlier in the week.
These events will help together clarify whether the Federal Reserve tends to maintain its current position of politics or consider discounts later this year. According to CME Fedwatch, it is now expected to be widely reduced in September, although this schedule is still very sensitive to the upcoming data.
The Canadian labor market indicates twice as much
Meanwhile, the local basics continue to influence the Canadian dollar. The labor market report on Friday of Statistics Canada showed a net profit of 7400 jobs in April, higher than 2500 expectations. However, the unexpected unemployment rate increased to 6.9 %, which is the highest level since late 2023 out of the epidemic distortions.
The report reveals signs of recession in the labor market, especially in the manufacturing sector, where job losses continue to accelerate. These trends have increased expectations to reduce the potential prices of Canada Bank early in June, which increases policy difference with federal reserve support and underie.
USD/CAD near 1.40 and builds a budget momentum
The USD/Cad was broken above the REERECTION level 61.8 % of Vibonacci in September 2024 to the 2025 Rally, which is located at 1.3944. The price movement is now facing the moving average for 200 days (currently at 1.4018), with the next resistance to the recovery level at 50 % at 1.4106.
Daily Plan USD/CAD
The ongoing daily closure over the 1.4018 region would enhance the bullish momentum and open the door towards the highest level in April at 1.4415 and possibly rush at 1.4536. However, the possible short -term uniformity can be considered to be a strong operation of the May decrease, especially with high -influential data and feeder comments.
On the negative side, the support lies at 1.3944 (the broken FIB level), followed by a decrease in November 2024 at 1.3823. The RSI is heading up and currently approaching 55.6, indicating that there is a space to achieve more gains before the emergence of excessive purchase conditions.
Questions and answers in Canadian dollars
The main factors that lead the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of exports in Canada in exchange for its imports. Other factors include market morale-if investors are eating more risky assets (risk) or searching for safe materials (risk)-with positive CAD risks. As its largest commercial partner, the health of the American economy is also a major factor that affects the Canadian dollar.
Canada Bank (BOC) has a major impact on the Canadian dollar by determining the level of interest rates that banks can persuade each other. This affects the level of interest rates for everyone. The main goal of BOC is to keep inflation by 1-3 % by setting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. Canada Bank can also use quantitative dilution and tighten it to influence credit conditions, with previous CAD negative and the other positive CAD.
The price of oil is a major factor that affects the value of the Canadian dollar. Petroleum is the largest export in Canada, so the price of oil tends to an immediate effect on the CAD value. In general, if the price of oil rises, the CAD rises, with the increased total demand for the currency. The opposite is the case if the price of oil decreases. The high oil prices also tend to increase the possibility of a positive commercial balance, which also supports CAD.
While inflation was always believed to be a negative factor of the currency because it reduces the value of money, the opposite was already the case in the modern era with the relaxation of capitalist controls across the border. Top inflation tends to lead the central banks to raise interest rates that attract more capital flows from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
Victory of macroeconomic data evaluates the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing, PMIS, employment services, and consumer morale surveys can affect CAD direction. The strong economy is useful for the Canadian dollar. Not only attracts more foreign investments, but it may encourage Canada Bank to set interest rates, which leads to a stronger currency. If economic data is weak, CAD is likely to fall.
Source: https://www.fxStreet.com/news/usd-cad-extends-gains-on-trade-trade-policy-divergence-dupture-us-data-202505121807