Market Data 
- The Canadian Dollar struggled to find direction on Friday.
- Canada revealed mixed employment figures in July.
- Tepid Friday caps off a tumultuous week, CAD hangs onto previous gains.
The Canadian Dollar (CAD) rounded out the trading week by holding onto a 1.5% gain against the US Dollar after a frothy trading week gave way to a flattened Friday session. The Canadian Dollar struggled to find directional momentum during the week’s final market window as markets take a breather and await the next round of key inflation figures due next week.
Canada delivered a lopsided labor print on Friday, with another contraction in Net Change in Employment but a better-than-expected print in July’s Unemployment Rate. Investors have pivoted into waiting for next week’s US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation figures, slated for Tuesday and Wednesday, respectively.
Daily digest market movers: Canadian Dollar flatlines on mixed labor
- Canada’s Net Change in Employment contracted in July, printing -2.8K versus the expected upswing to 22.5K from the previous month’s -1.4K.
- The Canadian Unemployment Rate held steady at 6.4% in July, averting the forecasted uptick to 6.5%.
- Canadian economic data remains thin next week, leaving USD/CAD traders to focus squarely on upcoming US inflation prints.
- US PPI and CPI inflation are broadly expected to tick lower as markets lean into Federal Reserve (Fed) rate cut hopes.
- Rate markets are pricing in better-than-even odds that Fed will kick off a rate cutting cycle with a 50-basis-point double cut in September.
Canadian Dollar PRICE This week
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | 0.37% | 0.06% | -0.98% | -0.90% | -0.75% | 0.73% | |
| EUR | 0.06% | 0.35% | -0.02% | -1.04% | -0.83% | -0.80% | 0.67% | |
| GBP | -0.37% | -0.35% | -0.32% | -1.36% | -1.15% | -1.14% | 0.33% | |
| JPY | -0.06% | 0.02% | 0.32% | -1.00% | -1.01% | -0.80% | 0.68% | |
| CAD | 0.98% | 1.04% | 1.36% | 1.00% | 0.11% | 0.24% | 1.54% | |
| AUD | 0.90% | 0.83% | 1.15% | 1.01% | -0.11% | 0.03% | 1.52% | |
| NZD | 0.75% | 0.80% | 1.14% | 0.80% | -0.24% | -0.03% | 1.49% | |
| CHF | -0.73% | -0.67% | -0.33% | -0.68% | -1.54% | -1.52% | -1.49% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Canadian Dollar price forecast: CAD gains poised to run aground of technical levels
The Canadian Dollar (CAD) gave a surprisingly healthy performance this week, climbing over one percent against most of its major currency counterparts and running neck-and-neck with the Australian Dollar (AUD) as the week’s best-performing currencies. USD/CAD fell -1.64% peak-to-trough this week after Monday’s bullish spike failed to claim the 1.3950 level, sending the pair back into the low end near the 50-day Exponential Moving Average (EMA) near 1.3730.
Friday’s flat print in USD/CAD daily candlesticks comes on the heels of five consecutive daily sessions in the red. However, the pair is still holding onto chart paper on the bullish side of the 200-day EMA at 1.3629, and Canadian Dollar buyers are running out of opportunities to drag USD/CAD lower with price action battling for a foothold above the 1.3700 handle.
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.
