Canadian Dollar flatlines against Greenback ahead of US CPI and Fed decision super Wednesday

June 10, 2024 6:46 pm

  • Canadian Dollar mostly mixed on Monday, flat against USD.
  • Canada mostly absent from economic calendar this week.
  • Speech from BoC Macklem due in the midweek market session.

The Canadian Dollar (CAD) is holding flat against the Greenback to kick off another trading week as momentum in the CAD space remains thin. Markets are still recovering from Friday’s jobs report, and volatility remains high despite a lack of momentum.

Canada is functionally absent from the economic calendar on Monday with strictly low-tier data on offer throughout the week. A speech from Bank of Canada (BoC) Governor Tiff Macklem will be released on Wednesday when the BoC head participates in a panel discussion ironically titled “Overcoming Economic Volatility”. However, the BoC Governor’s words are likely to be overshadowed by a US Consumer Price Index (CPI) and Federal Reserve (Fed) rate call double-header also due on Wednesday.

Daily digest market movers: Data-light CAD goes with the flows

  • The Canadian Dollar is holding flat against its closest peer, the US Dollar, on a data-deprived Monday as the Friday NFP hangover continues.
  • Investors are looking ahead to key US inflation data due on Wednesday, as well as the Fed’s update to its interest rate projections for the next few years.
  • The NY Fed published a consumer survey on Monday that revealed consumers still don’t feel great about the long-term inflation outlook. 
  • Median NY Fed survey results showed that consumer one-year inflation expectations ticked down to 3.2% from the previous 3.3%, but five-year inflation expectations rose to 3.0% from the previous 2.8%.
  • BoC”s Macklem is expected to get drowned out on Wednesday by shifts in Fed rate expectations.

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 Euro.

USD   0.44% -0.12% 0.08% 0.00% -0.42% -0.28% -0.08%
EUR -0.44%   -0.21% -0.14% -0.18% -0.58% -0.46% -0.28%
GBP 0.12% 0.21%   0.20% 0.03% -0.37% -0.25% -0.07%
JPY -0.08% 0.14% -0.20%   -0.06% -0.56% -0.45% -0.12%
CAD -0.00% 0.18% -0.03% 0.06%   -0.39% -0.28% -0.10%
AUD 0.42% 0.58% 0.37% 0.56% 0.39%   0.13% 0.31%
NZD 0.28% 0.46% 0.25% 0.45% 0.28% -0.13%   0.18%
CHF 0.08% 0.28% 0.07% 0.12% 0.10% -0.31% -0.18%  

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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Technical analysis: Canadian Dollar shuffles in place, USD/CAD stuck just below 1.3800

The Canadian Dollar (CAD) is giving a firmly mixed performance on Monday, holding flat against the US Dollar (USD) as a lack of momentum plagues the key CAD pairing. The CAD gained around a quarter of a percent against the Euro (EUR), but shed four-tenths of one percent against the Australian Dollar (AUD).

USD/CAD is hung up on thin chart movement just beneath the 1.3800 handle. The pair’s topside push from last Friday failed to extend into another day of gains, but sellers have been unable to regain control.

The 1.3780 level is the target for intraday buyers to beat, while short positions will need to accumulate enough pressure to drive bids back to the 1.3700 handle. A lack of trend is plaguing USD/CAD with the pair up 3.9% in 2024 but remaining down from the year’s peak bids at 1.3846 set back in mid-April.

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.

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