- USD/CAD started the day soft before a pivot in the US session.
- Canada absent from the economic calendar on Tuesday.
- US Durable Goods declined more than expected, US PCE in the pipe.
USD/CAD settled to an intraday low of 1.3484 before rallying back above the 1.3500 handle after US Durable Goods Orders declined more than expected. The pair remains mired in near-term congestion as markets await US Personal Consumption Expenditure Price Index (PCE) data on inflation later in the week.
Canada waits until Wednesday to make an appearance on the economic calendar with Q4’s Current Account. This Canadian data release will be overshadowed, however, by the US Gross Domestic Product (GDP) report due simultaneously at 13:30 GMT on Wednesday.
Daily digest market movers: USD/CAD pivots on Durable Goods miss
- US Durable Goods Orders declined 6.1% in January, missing the -4.5% forecast versus the previous month’s -0.3% (revised lower from 0.0%).
- The Conference Board Consumer Confidence Index also declined more than expected, printing at 106.7 versus the forecast of 115.0, previously 114.8.
- The US Housing Price Index rose less than expected in December, climbing just 0.1% MoM versus the 0.3% forecast. It was previously revised to 0.4% in November.
- Canada’s Q4 Current Account on Wednesday is expected to recover but still remain in negative territory, forecast to print at -1.25 billion versus -3.22 billion previously.
- US annualized Q4 GDP is forecast to hold steady at 3.3%.
- Canada’s Q4 GDP to follow on Thursday, markets expect a rebound in the yearly figure to 0.8% from -1.1%.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.01% | -0.01% | 0.16% | -0.10% | -0.06% | -0.11% | -0.08% | |
| EUR | 0.01% | -0.01% | 0.16% | -0.10% | -0.04% | -0.12% | -0.07% | |
| GBP | 0.02% | 0.00% | 0.17% | -0.10% | -0.04% | -0.12% | -0.07% | |
| CAD | -0.15% | -0.17% | -0.17% | -0.28% | -0.22% | -0.26% | -0.24% | |
| AUD | 0.11% | 0.10% | 0.10% | 0.27% | 0.06% | -0.01% | 0.02% | |
| JPY | 0.06% | 0.07% | 0.06% | 0.20% | -0.02% | -0.04% | -0.03% | |
| NZD | 0.10% | 0.11% | 0.08% | 0.26% | -0.01% | 0.04% | 0.05% | |
| CHF | 0.08% | 0.07% | 0.07% | 0.24% | -0.03% | 0.03% | -0.04% |
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: USD/CAD continues to chug near 1.3500
USD/CAD dipped into 1.3484 on Tuesday before recovering into the familiar 1.3520 level. The pair continues to churn around the 1.3500 handle, and the 200-hour Simple Moving Average (SMA) remains a key barrier to momentum in either direction in the near term.
The immediate technical barrier of February’s high of 1.3586 remains a key level for bulls to break through to challenge the 1.3600 handle. A rising pattern of higher lows on the daily candles provides technical support for immediate bullish momentum, but price action is trading into a heavy supply zone from 1.3500 to 1.3550.
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.