- The Canadian Dollar is adrift on a thin market at the start of the trading week.
- Canada’s Remembrance Day holiday has most provinces out of the office for Monday.
- The economic calendar is sparse this week, little Canadian data on offer.
The Canadian Dollar (CAD) is finding little momentum in thin holiday markets, with the majority of Canadian provinces and territories taking the day off in observance of Remembrance Day.
There’s little of note on the economic data docket for the CAD this week, and the Loonie will be at the whim of overall market sentiment as the trading week unwinds.
Daily Digest Market Movers: Canadian Dollar shifting around a base of thin bids for Monday
- Monday momentum is limited, capping momentum in either direction to kick off the early trading week.
- There is a notable lack of viable economic data on offer for CAD traders this week.
- Loonie to trade according to market flows with a hefty US data schedule slated for this week.
- Early Tuesday will see Bank of Canada (BoC) Deputy Governor Toni Gravelle deliver talking points while participating in a panel discussion labeled “Challenges for Financial Stability and Financial Regulation amid Heightened Uncertainty”.
- BoC Dep Gov Gravelle is participating in the Third High-Level Conference on Global Risk, Uncertainty, and Volatility, in Zurich, Switzerland.
- The BoC’s Council Member is not expected to move markets much, but investors will want to keep an eye out.
Technical Analysis: Canadian Dollar sees thin action for Monday, US Dollar in the driver’s seat
The CAD is seeing thin markets on Monday as it trades against the US Dollar (USD), and shifting sand beneath the Greenback is sending the USD/CAD pair down below the 1.3800 handle for Monday. Thin markets are set to keep the Loonie-Dollar pair constrained for the early part of the week’s trading session.
The USD/CAD is struggling to maintain bullish momentum following last week’s rebound from the 50-day Simple Moving Average (SMA) near 1.3630. A continuation of downside moves will see last Friday’s rejection from 1.3850 firm up into a technical ceiling below November’s early high bids near 1.3900.
On the downside, a bearish extension will see challenges from the 200-day SMA currently pushing upward through 1.3500. A lack of recent directional momentum is seeing technical indicators begin to drift toward the middle, with the Relative Strength Index (RSI) currently heading into the 50.0 median barrier.
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 weakest against the Pound Sterling.
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).
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.