- The Canadian dollar hit an eight-week low as the US PMI rose.
- In Canada, central bank governor Macklem is scheduled to take office on Tuesday.
- Statements from US Federal Reserve policymakers weighed on markets on Monday.
The Canadian dollar (CAD) fell sharply on Monday after the market broadly rallied against the US dollar (USD) following a much better-than-expected US ISM Services Purchasing Managers Index (PMI) reading. . Additionally, various comments from Federal Reserve policymakers have put investors’ outlook at risk and dampened their risk appetite.
Bank of Canada (BoC) Governor Tiff Macklem is scheduled to speak and answer questions on monetary policy transmission in Quebec on Tuesday, leaving the Canadian dollar without any meaningful domestic announcements on Monday.
A daily digest of market moves: Canadian dollar retreats as market expectations recalibrate
- U.S. data showed Monday’s currency flows were dominated by Fedspeak, with Canada not included in the economic calendar.
- The US ISM Services PMI for January rose to 53.4 versus the expected 52.0, accelerating above the previous month’s 50.5 which had only a slight correction.
- U.S. prices paid for ISM services in January hit an 11-month high as businesses continue to face inflationary pressures, up sharply from December’s 56.7 (revised downward from 57.4).
- The US ISM Services New Orders Index rebounded to 55 in January from 52.8 in December as economic activity continues to plague the market and expectations for an early rate cut.
- Minneapolis Fed President Kashkari said Monday that the rise in the neutral rate means monetary policy may not be as tight as previously thought.
- The Fed’s Kashkari also noted that although the U.S. statistics were generally positive, some weaknesses remained, particularly an increase in consumer delinquencies.
- Chicago Fed President Austan Goolsby walked back the Kashkari Fed’s earlier statements, saying he would not completely rule out a March interest rate cut, although the data itself needs further confirmation of the evolution of inflation.
- According to CME’s FedWatch tool, money markets are pricing in a barely 15% chance of a March rate cut.
canadian dollar price today
The table below shows the percentage change of the Canadian Dollar (CAD) against major currencies today. The Canadian dollar was the weakest against the US dollar.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | 0.35% | 0.70% | 0.52% | 0.35% | 0.11% | 0.16% | 0.40% | |
| EUR | -0.35% | 0.34% | 0.17% | -0.01% | -0.25% | -0.19% | 0.04% | |
| GBP | -0.70% | -0.34% | -0.17% | -0.36% | -0.60% | -0.54% | -0.30% | |
| CAD | -0.52% | -0.17% | 0.17% | -0.19% | -0.43% | -0.37% | -0.13% | |
| australian dollar | -0.35% | 0.02% | 0.36% | 0.19% | -0.24% | -0.18% | 0.05% | |
| JPY | -0.11% | 0.24% | 0.58% | 0.42% | 0.24% | 0.05% | 0.29% | |
| new zealand dollar | -0.15% | 0.20% | 0.54% | 0.37% | 0.19% | -0.07% | 0.24% | |
| Swiss franc | -0.39% | -0.04% | 0.31% | 0.12% | -0.04% | -0.28% | -0.23% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Euro from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents EUR (base)/JPY (estimate).
Technical analysis: Canadian dollar weakens across the board, USD/CAD tests 8-week high
The Canadian dollar (CAD) is expected to fall sharply on Monday as the loonie loses weight against nearly all major currencies in the new trading week. The Canadian dollar has fallen sharply against the US dollar, dropping 0.5 per cent on Monday, one-third of a per cent against the Japanese yen (JPY) and one-quarter per cent against the New Zealand dollar (NZD). Despite widespread selling pressure, the Canadian dollar still rose a quarter of a percent against the worst-performing currency, the British pound (GBP), on Monday, forcing the Canadian dollar to settle for the second-worst level. It was done.
Monday’s decline in the Canadian dollar caused USD/CAD to test the 1.3500 handle and encounter short-term technical resistance at the familiar intraday swing high near 1.3540.
USD/CAD’s strength on Monday pushed USD/CAD back to the top of the 200-day simple moving average (SMA) below the 1.3500 handle, weighing down an immediate technical top from 1.3600, pushing it to an eight-week high. It is being
USD/CAD hourly chart
USD/CAD daily chart
Fed Frequently Asked Questions
Monetary policy in the United States is shaped by the Federal Reserve Board (Fed). The Fed has two responsibilities: achieving price stability and promoting full employment. The main tool to achieve these goals is to adjust interest rates.
If prices rise too fast and inflation exceeds the Fed’s 2% target, interest rates will be raised, raising borrowing costs for the entire economy. This makes the US a more attractive place for international investors to put their money, and the US dollar (USD) appreciates.
If inflation falls below 2% or unemployment is too high, the Fed could lower interest rates to encourage borrowing, which would weigh on the dollar.
The Federal Reserve (Fed) holds eight annual policy meetings where the Federal Open Market Committee (FOMC) assesses economic conditions and decides on monetary policy.
Twelve Federal Reserve officials will attend the FOMC meeting. These include seven members of the Board of Directors, the president of the New York Fed, and four of the remaining 11 regional reserve bank presidents, all of whom serve one-year terms on a rotating system. .
In extreme circumstances, the Federal Reserve may resort to a policy called quantitative easing (QE). QE is a process by which the Fed significantly increases the flow of credit in a stalled financial system.
This is a non-standard policy tool used in times of crisis or when inflation is extremely low. This was the Fed’s weapon of choice during the Great Financial Crisis of 2008. This involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. QE typically weakens the US dollar.
Quantitative tightening (QT) is the reverse process of quantitative easing, in which the Federal Reserve stops buying bonds from financial institutions and reinvests the principal of maturing bonds into new bond purchases. do not. It is usually positive for the value of the US dollar.
