The Canadian Dollar (CAD) had a relatively quiet Monday, with the currency trading within a narrow range against its major counterparts. Housing Starts in Canada exceeded expectations for the year ending in May, but prices and activity remained subdued. Meanwhile, the US New York Empire Manufacturing Index showed improvement in June, although it remained in contraction territory. Investors are now awaiting the release of US Retail Sales figures on Tuesday, which will likely have an impact on market movements.
Canadian Housing Starts rose to 264.5K YoY in May, surpassing the forecast of 247K and showing an increase from the previous period. However, the Canadian Real Estate Association reported that home prices fell by 0.2% MoM in May and 2.4% YoY. Additionally, home sales declined by 0.6% MoM, indicating a slowdown in activity in the housing market. In the US, the NY Empire State Manufacturing Index rose to -6.0 in June, higher than expectations but still within contraction territory. The upcoming US Retail Sales data release will be closely watched by investors this week.
The Canadian Dollar faced a mixed performance against major currencies on Monday, with gains and losses within a quarter of a percent. The currency remained steady as markets opened for the new trading week. USD/CAD briefly touched an intraday high above 1.3760 before retracing to around 1.3740. Long-term momentum for USD/CAD leans towards the bullish side, with the pair holding above the 50-day Exponential Moving Average (EMA) at 1.3673. Although USD/CAD has been on an upward trend, it has yet to establish a new high since April.
Key factors influencing the Canadian Dollar include interest rates set by the Bank of Canada, the price of Oil, the overall health of the Canadian economy, inflation, and the Trade Balance. The Bank of Canada plays a crucial role in determining interest rates, with higher rates typically favoring the CAD. The price of Oil, as Canada’s largest export, also has a significant impact on the currency. Additionally, macroeconomic data releases such as GDP, PMIs, and employment figures can influence the direction of the CAD based on the overall economic health of Canada.
In conclusion, the Canadian Dollar experienced a muted trading session on Monday, with Housing Starts exceeding expectations but housing prices and sales activity showing a decline in May. The US manufacturing sector showed signs of improvement, although still within contraction territory. Investors are now looking towards the upcoming US Retail Sales data release for further market direction. The performance of the Canadian Dollar will continue to be influenced by a combination of factors including interest rates, Oil prices, economic indicators, and market sentiment in the coming days.
