The Canadian dollar retreated against its US counterpart on Monday, following a decline in the prices of crude oil as investors became concerned about growing global supply. The loonie moved further south after a meeting between finance ministers of member countries in the Group of Twenty ended with a decision to drop a pledge to support free trade.
Canadian Dollar CAD
Central Bank: Bank of Canada
Public Debt to GDP Ratio, 2015: 95.4%
Trade Balance, 2015: -$12.6 bln.
Inflation, 2015: 1.2%
Major commodity exporter
Factors of Weakness
Dependence on United States as a major counterparty
The Canadian dollar is the official currency of Canada and is the 7th most traded currency in the world. It is often nicknamed “loonie” for the image of the aquatic bird on $C1 coin. The loonie was introduced as a currency used in Canada and all of its provinces in 1871, while the fixed exchange rate was abandoned in 1970. It is used by some central banks as a reserve currency. The performance of the currency depends on raw materials. Prices for crude oil are the most influential factor on the value of Canada’s dollar as oil is the most important export of Canada.
Canadian Dollar News Archive
The Canadian dollar rallied today following the release of solid employment data from Canada. The currency has trimmed its gains by now but is still trading above the opening level. The loonie’s performance against the euro was different, though, as the Canadian dollar was unable to rise against the shared 19-nation currency.
The CAD/JPY currency pair today rallied briefly after the release of positive housing starts and building permits data, which exceeded expectations. However, the rally was short-lived as the loonie’s weakness against the US dollar, its main trading partner, spread to affect the Canadian dollar’s performance against other currencies.
The Canadian dollar retreated against its US counterpart and other major peers on Tuesday, despite a report that revealed a stronger trade surplus in Canada than expected. The US dollar has been strongly supported this week by higher odds of an interest rate hike from the Federal Reserve.
The USD/CAD currency pair deflated from its bullish trend after the release of GDP figures for December by Statistics Canada earlier today. However, this was a temporary move given the prevailing positive market sentiment towards the US dollar as investors price-in the possibility of a Fed rate hike in March.
The USD/CAD currency pair rallied higher today after the Bank of Canada today announced that it would be maintaining interest rates at the same level. The currency pair’s rally was also largely triggered by the greenback’s solid performance after the release of the US ISM Manufacturing PMI data, which beat expectations.
The Canadian dollar fell against most of its major peers on Tuesday, following a report that revealed that gross domestic product in the United States, Canada’s biggest trade partner, was weaker than expected. Another report in Canada, which showed healthy inflation in the manufacturing sector, failed to push the loonie into the positive territory.
The Canadian dollar failed to move higher against its major peers on Monday, even as higher oil prices initially supported the currency. Demand for the loonie was weak today as traders held their positions ahead of an interest rate decision that the Bank of Canada will announce in two days.
The Canadian dollar moved higher against its US counterpart on Friday, following fresh data that revealed that Canada’s inflation improved to a healthier level. However, the loonie’s gains against the greenback were limited as new home sales improved in the United States, which supported the US dollar.
The Canadian dollar rose against its US counterpart on Thursday, as traders anticipate the release of the Canadian consumer price index data tomorrow. Another release from the US Federal Reserve on Wednesday contained no strong signals for an interest rate hike in March, which left the greenback unsupported today.