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  • Markets pile into the US Dollar after NFP posts biggest number in a year.
  • Canada wrapped up econ data on Wednesday, Loonie traders await Ivey PMIs next Tuesday.
  • US NFPs also saw huge revisions on the back end.

The Canadian Dollar (CAD) is broadly higher for Friday, gaining ground against nearly every major currency peer across the FX market, but the US Dollar (USD) has taken the top spot for the day after US Nonfarm Payrolls (NFP) surged to their highest figure in a year.

Canada is absent from the economic calendar on Friday, and CAD investors will be looking forward to next Tuesday’s Canadian Ivey Purchasing Managers Index (PMI) figures. Bank of Canada (BoC) Governor Tiff Macklem will also be making an appearance next Tuesday.

Daily digest market movers: US NFPs dominate the market, Canadian Dollar trims weight against the Greenback

  • US NFPs printed at their highest level in a year, coming in at 353K in January and easily trouncing the forecast of 180K.
  • December’s NFP also saw a drastic upside revision, from 216K to 333K.
  • US Average Hourly Earnings in January also climbed, printing at 0.6% versus the forecast of 0.3% and the previous month’s 0.4%.
  • YoY Average Hourly Earnings climbed to 4.5% for the year ending in January, compared to the forecast of 4.1% and the last print of 4.4% (revised upward from 4.1%).
  • The US Dollar surged across the entire FX market post-NFP, marking up gains against all of its major currency peers.
  • The US Dollar is one of the best performers on the week and is in the green or flat across the board.
  • The Canadian Dollar saw gains against most of its peers, but shed weight against the Greenback.
  • CAD and USD vie for top spot on the week, but NFP beat is the Greenback’s clincher.

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 Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.68% 0.73% 0.51% 0.87% 1.22% 1.17% 0.91%
EUR -0.68%   0.03% -0.16% 0.19% 0.55% 0.48% 0.22%
GBP -0.71% -0.04%   -0.20% 0.15% 0.50% 0.45% 0.19%
CAD -0.51% 0.17% 0.22%   0.35% 0.70% 0.66% 0.37%
AUD -0.88% -0.19% -0.14% -0.35%   0.35% 0.30% 0.04%
JPY -1.16% -0.55% -0.43% -0.64% -0.28%   0.03% -0.23%
NZD -1.18% -0.49% -0.45% -0.66% -0.31% 0.05%   -0.27%
CHF -0.92% -0.21% -0.17% -0.38% -0.02% 0.33% 0.28%  

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).

Technical Analysis: USD/CAD climbs back into familiar territory near 1.3450

The Canadian Dollar (CAD) is up against the majority of its major currency peers, gaining two-thirds of a percent against the Japanese Yen (JPY) and the New Zealand Kiwi (NZD). The Canadian Dollar shed half a percent against the US Dollar, bringing the USD/CAD within reach of the week’s opening bids as the pair goes flat.

USD/CAD surged back above the 200-hour Simple Moving Average (SMA) near 1.3443, and the pair tested into the 1.3480 neighborhood on Friday.

USD/CAD’s Friday surge sends the pair back into a consolidation pattern between the 50-day and 200-day SMAs, and USD/CAD is set to continue churning in near-term congestion as prices stick close to the 200-day SMA near the 1.3500 handle.

USD/CAD hourly chart

USD/CAD daily chart

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

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