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Canadian Dollar falling back after failed relief rally against Greenback

November 9, 2023| Forex Market


  • Canadian Dollar is losing traction after a brief reprieve from US Dollar bidding.
  • Canada economic calendar data has wrapped up for the week.
  • Crude Oil softly bounces after getting pummeled.

The Canadian Dollar (CAD) finally caught some relief, digging in its heels and clawing back losses from its three-day backslide against the US Dollar (USD). The Loonie found some bids as the Greenback eased slightly heading into the back half of the trading week. Now, markets are seeing a pivot back into USD bidding, and the Loonie is giving back most of its Thursday intraday gains.

There is little of note remaining on the economic calendar for Canada this week, and USD flows will be in the driver’s seat through Friday.

Fed officials delivered dovish comments, jobless claims were mixed, and investors await another appearance from Federal Reserve (Fed) President Jerome Powell later in the day.

Daily Digest Market Movers: Canadian Dollar bounces back as US Dollar slips

  • The CAD is catching a mild relief rally on Thursday as broader markets trim USD bids.
  • US Fed Presidents Harker and Barkin gave mildly dovish comments early Thursday, both see potential for downside risks.
  • Fed Chairman Jerome Powell speaks later today, investors to be focusing intently.
  • Crude Oil prices are finding a slight lift heading into the back half of the week.
  • CAD discovers support from recovering Crude bids, accelerating the rebound.
  • US Michigan Consumer Sentiment data on Friday to close out the trading week.

Technical Analysis: Canadian Dollar rebounds but shows some weak points

The Canadian Dollar (CAD) found enough bullish spark to push the USD/CAD pair back down the charts, but plenty of upside potential remains in the Greenback, and the pair is currently catching a recovery bounce from 1.3750.

1.3800 is set to be the main battleground for the back half of the trading week, with the pair slipping from an intraday high of 1.3807. A bearish continuation from this region will see a new technical ceiling baked into the USD/CAD.

Intraday action is getting hung up with returns to near-term medians. Most daily price action is sticking close to the 200-hour Simple Moving Average (SMA).

Daily candlesticks see the USD/CAD still on the high side of a higher low pattern firming up from a bullish bounce off the 200-day SMA back in late September. The last swing low saw a topside rebound from the 50-day SMA near 1.3650 just last week.

USD/CAD Daily Chart

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 Pound Sterling.

USD   0.27% 0.41% -0.02% 0.30% 0.22% -0.15% 0.31%
EUR -0.32%   0.04% -0.34% -0.01% -0.09% -0.47% -0.01%
GBP -0.40% -0.06%   -0.42% -0.20% -0.17% -0.55% -0.06%
CAD 0.02% 0.36% 0.43%   0.34% 0.24% -0.13% 0.37%
AUD -0.20% 0.16% 0.22% -0.21%   0.03% -0.35% 0.02%
JPY -0.21% 0.11% 0.15% -0.23% 0.03%   -0.37% 0.09%
NZD 0.10% 0.47% 0.51% 0.14% 0.40% 0.34%   0.42%
CHF -0.33% -0.05% 0.08% -0.34% -0.04% -0.09% -0.50%  

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).

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

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