- Canadian Dollar trapped near familiar levels, gives mixed performance.
- Canada absent from the economic calendar until next week’s GDP.
- US GDP comes in soft, but PCE hints at still high inflation.
The Canadian Dollar (CAD) spread on Thursday, giving a mixed performance and sticking close to familiar technical levels after US data printed in both directions early in the US market session. US Gross Domestic Product (GDP) eased more than expected, a boon for investors looking for rate cuts from the US Federal Reserve (Fed). However, inflation continues to be a major sticking point for rate cut hopes after US Personal Consumption Expenditure (PCE) inflation climbed even higher than expected.
Canada is absent from the economic calendar for the remainder of the trading week. The next piece of useful Canadian economic data will be next Tuesday’s Canadian MoM GDP for February. Canada’s S&P Global Manufacturing Purchasing Managers Index (PMI) will also print next Wednesday.
Daily digest market movers: Canadian Dollar lacks momentum after US data fails to deliver clean picture
- Annualized US GDP for the first quarter eased to 1.6%, declining from the previous 3.4% and falling well short of the forecast of 2.5%.
- Read more: US GDP expands less that expected in Q1
- Rapidly slowing GDP is a welcome boon for investors desperate for rate cuts from Fed. However, US PCE inflation in Q1 rose to 3.7%, vaulting over forecast of 3.4% and accelerating from previous 2.0%.
- Rising inflation will keep Fed hobbled on rate cuts, markets churn on mixed print.
- Friday’s US PCE Price Index will draw additional attention after Thursday’s gloomy bellwether.
- March’s MoM US PCE Price Index is expected to hold steady at 0.3%, while the YoY figure is expected to tick down to 2.6% from 2.8%.
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 | -0.15% | -0.24% | -0.06% | -0.10% | 0.22% | 0.00% | -0.04% | |
| EUR | 0.17% | -0.05% | 0.11% | 0.07% | 0.39% | 0.16% | 0.13% | |
| GBP | 0.23% | 0.08% | 0.17% | 0.15% | 0.47% | 0.21% | 0.20% | |
| CAD | 0.11% | -0.06% | -0.13% | -0.01% | 0.30% | 0.09% | 0.05% | |
| AUD | 0.10% | -0.05% | -0.12% | 0.04% | 0.31% | 0.09% | 0.06% | |
| JPY | -0.21% | -0.35% | -0.44% | -0.28% | -0.31% | -0.22% | -0.26% | |
| NZD | 0.04% | -0.12% | -0.20% | -0.04% | -0.07% | 0.25% | 0.02% | |
| CHF | 0.04% | -0.12% | -0.20% | -0.04% | -0.05% | 0.28% | 0.01% |
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 trades steady but mixed
The Canadian Dollar (CAD) is getting pushed into the middle on Thursday, trading flat to within a quarter of a percent across the major currency board during the US market session. The CAD sees a meager tenth of a percent gain against the US Dollar (USD). The Japanese Yen (JPY) is down a quarter of a percent against the Canadian Dollar as the market’s worst-performing currency on the day.
The CAD continues to trade within a tight range near the 1.3700 handle against the US Dollar, and the USD/CAD has priced in a near-term price floor near 1.3660. A topside break is hampered by the 200-hour Exponential Moving Average (EMA) at 1.3710, and a heavy supply zone rests just below current price action below 1.3600.
USD/CAD hourly chart
USD/CAD daily chart
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.