- Canadian Dollar slips further on Wednesday as US Dollar bids firm up.
- Canada economic data on hold until Friday, to be overshadowed by US NFP.
- US ISM PMI beat expectations but still on the contractionary side.
The Canadian Dollar (CAD) is falling for the fifth consecutive trading day against the US Dollar (USD), with the Greenback getting bolstered against the broader FX market after the US ISM Manufacturing Purchasing Managers’ Index (PMI) for December came in above expectations, despite still printing in contractionary territory below the 50.0 midline.
Economic data from Canada is once again absent from the data docket on Wednesday, and Friday’s Canadian Unemployment Rate and Average Hourly Wages are set to be entirely eclipsed by the US Nonfarm Payrolls (NFP) for December.
Daily digest market movers: Canadian Dollar giving up further ground amidst USD push
- Despite declines against the outperforming Greenback and Pound Sterling (GBP), the CAD is in a firm position against the rest of the majors.
- The Canadian Dollar is down around a third of a percent against the USD and almost half of a percent against the GBP.
- The Aussie (AUD) has given up around 0.5% against the Loonie, while the Yen (JPY) has retreated nearly three-quarters of a percent against the Canadian Dollar.
- The US ISM Manufacturing PMI for December printed at 47.4, beating the market forecast of 47.1 and climbing over November’s print of 46.7.
- The US JOLTS Job Openings in November showed less hiring potential than expected, with 8.79 million jobs available versus the forecast 8.85 million. October’s JOLTS openings were also revised up slightly from 8.733 million to 8.852 million.
- Investors will note that JOLTS has a small sample size that leaves the data prone to volatility, as well as the published figures being subject to revision up to five years after publication.
- Wednesday’s key data release comes towards the end of the US trading session when the Federal Reserve (Fed) drops their latest meeting minutes at 19:00 GMT.
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 | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.30% | -0.19% | 0.27% | 0.66% | 0.97% | 0.23% | 0.11% | |
| EUR | -0.30% | -0.50% | -0.03% | 0.36% | 0.67% | -0.08% | -0.18% | |
| GBP | 0.19% | 0.49% | 0.46% | 0.85% | 1.15% | 0.42% | 0.31% | |
| CAD | -0.28% | 0.03% | -0.48% | 0.37% | 0.70% | -0.04% | -0.15% | |
| AUD | -0.66% | -0.34% | -0.86% | -0.38% | 0.32% | -0.43% | -0.53% | |
| JPY | -0.98% | -0.68% | -1.19% | -0.70% | -0.31% | -0.77% | -0.86% | |
| NZD | -0.23% | 0.08% | -0.42% | 0.05% | 0.44% | 0.74% | -0.11% | |
| CHF | -0.11% | 0.19% | -0.31% | 0.15% | 0.54% | 0.85% | 0.11% |
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 heading for a fifth straight day of losses
The Canadian Dollar (CAD) is slipping back against the US Dollar, extending recent declines and driving the USD/CAD pair further above the 200-hour Simple Moving Average (SMA). The pair is set for a fresh challenge of the 1.3400 level, provided near-term action continues to catch support from the bullish crossover of the 50-hour and 200-hour SMAs near 1.3275.
Daily candlesticks have the USD/CAD extending a bullish correction into a fifth consecutive trading day, but the pair remains firmly below the 200-day SMA near 1.3500. Despite this, technical indicators are still recovering from getting pinned deep into oversold territory after the pair’s multi-week decline from November’s peak of 1.3899. Further room to run could be uncovered before the 50-day SMA manages to make a bearish cross of the 200-day SMA.
USD/CAD Hourly Chart
USD/CAD Daily Chart
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.