The Canadian Dollar (CAD) experienced a decline in value on Wednesday due to weakening market sentiment, causing bids to flow into the US Dollar (USD). This resulted in the Canadian Dollar reaching its lowest point against the Greenback in a week, setting the stage for the USD to achieve its third consecutive gain on the CAD. With Canada only providing low-tier data until Friday, CAD investors will have to wait for March’s Canadian Retail Sales figures to gauge the currency’s performance. US data releases will play a crucial role in influencing market movements for the rest of the week.
In terms of market movements, the release of the Federal Reserve’s Meeting Minutes on Wednesday will provide insight into the FOMC’s internal dialogue surrounding interest rates. US Existing Home Sales disappointed for the second consecutive month, falling below expectations and indicating a potential slowdown in the housing market. Fitch Ratings also highlighted concerns about sticky inflation worldwide, warning that sustained high prices could deter central banks from implementing rate cuts. Investors will be watching US Purchasing Managers Index (PMI) data closely on Thursday, with hopes for a neutral reading. The week will conclude with the release of Canadian Retail Sales and US Durable Goods Orders on Friday.
The table below shows the percentage change of the Canadian Dollar against major currencies such as the USD, EUR, GBP, JPY, AUD, NZD, and CHF. The Canadian Dollar performed relatively well compared to the Australian Dollar but showed weakness against the US Dollar and other major currencies. Technical analysis suggests that the CAD shed a fifth of a percent against the Greenback on Wednesday, remaining lower against currencies such as the NZD and GBP. However, the CAD managed to gain against the AUD, reflecting a mixed performance in the midweek market session.
Factors influencing the Canadian Dollar include interest rates set by the Bank of Canada, the price of Oil (Canada’s largest export), the country’s economic health, inflation, and trade balance. The BoC plays a significant role in determining CAD value by adjusting interest rates to maintain inflation levels. Higher Oil prices generally support the CAD, while inflation may attract capital inflows and boost demand for the currency. Macroeconomic indicators like GDP, employment, and consumer sentiment surveys also impact the CAD’s performance, with a strong economy typically leading to a stronger Canadian Dollar. The overall health of the US economy, Canada’s largest trading partner, is another key factor influencing the CAD.
