USD/CAD Forecast and News


USD/CAD falls sharply to 1.3630 as strong Canadian Employment numbers

USD/CAD drops sharply to 1.3630 after strong Canadian Employment data. Canadian job market expanded by 90.4K fresh payrolls while annual wage growth slowed to 4.8%. Fed Bostic said the central bank is uncertain about when and how much interest rates should be reduced.

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USD/CAD Bullish Themes

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Editors' picks

EUR/USD turns negative near 1.0760

EUR/USD turns negative near 1.0760

The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.

EUR/USD News

GBP/USD comes under pressure and challenges 1.2500

GBP/USD comes under pressure and challenges 1.2500

GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.

GBP/USD News

USD/JPY moves above 155.50 due to the firmer US Dollar

USD/JPY moves above 155.50 due to the firmer US Dollar

USD/JPY gained ground due to the recovery in the US Dollar on Friday. Japan’s Current Account Surplus was lower than market expectations, weakening the Japanese Yen. US Initial Jobless Claims rose to an eight-month high of 231K, surpassing estimates of 210K.

USD/JPY News

Gold retreats from highs on stronger Dollar, yields

Gold retreats from highs on stronger Dollar, yields

XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.

Gold News

Oil Price Analysis: Falling in a channel over the short-term

Oil Price Analysis: Falling in a channel over the short-term

Oil is falling in a descending channel on the short-term horizon. Within the channel it is currently correcting higher, however, it is likely to capitulate and resume its downtrend. Only a decisive break out of the channel would reverse the short-term bearish outlook. 

Oil News

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Signatures


USD/CAD YEARLY FORECAST

How could USD/CAD move this year? Our experts make a USD/CAD update forecasting the possible moves of the Canadian dollar (CAD) - US dollar (USD) pair during the whole year. Don't miss our 2024 USD/CAD forecast!

USD/CAD FORECAST 2024

2023’s comparatively quiet year in the charts, spurred by broad-market flows into and out of the US Dollar as investors grappled with Fed policy and BoC rate policy stuck in lockstep with Fed rate guidance, is set to give way to an interesting year as central bank policies see increasing risk of divergence with the Canadian economy accelerating into a recession in the first half of 2024. Read more details about the forecast.

2024 OUTLOOK FOR USD/CAD

The USD/CAD will see diverging central bank policy as a key driver through 2024, and the correlation between the Canadian Dollar and Crude Oil is likely to hold firm through the upcoming trading year. Despite musings in recent years about a shakeout in the Loonie-Crude connection, 2023 saw USD/CAD and West Texas Intermediate (WTI) US Crude Oil moving around the charts in lockstep.

The Canadian economy is expected to run into headwinds through the second half of 2024, coinciding with a global growth slowdown that could hamper Crude Oil prices next year as fossil fuels demand flounders in low-growth or recessionary environments.


ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE USD/CAD

In Canada, the organizations and people that affect the most the moves of the pair are:

  • Bank of Canada (BoC, Canada’s Central bank) that issues statements and decides on the interest rates of the country. Its president is Tiff Macklem.
  • Canadian Government and its Department of Finance that implement policies that affect the economy of the country.
  • CAPP (Canadian Association of Petroleum Producers): Canada being a prominent oil and natural gas producer, the trade organization of that industry is very important.

In the USA, we have:

  • The US Government: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it, in this case, the Canadian Dollar.
  • Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.

In terms of economic data, we should highlight the Trade Account Balance, a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the USD/CAD. If a steady demand in exchange for CAD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the CAD.

Inflation is another economic value that is important for this pair. It is measured among others by the CPI (Core Price Index) and the PPI (Production Price Index). They are key indicators to measure inflation and changes in purchasing trends.


Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

Tiff Macklem

Tiff Macklem was born in Montréal, Quebec, in 1961. He was appointed Governor of the Bank of Canada, effective 3 June 2020, for a seven-year term. He is the tenth governor of the Bank of Canada. As Governor, he is also Chairman of the Board of Directors of the Bank for International Settlements (BIS). He currently chairs both, the BIS Audit Committee and the Consultative Council for the Americas.

BOC NEWS & ANALYSIS

FED NEWS & ANALYSIS


About USD/CAD

THE 'LOONIE'

The USD/CAD pair tells the trader how many Canadian Dollars (the quote currency) are needed to purchase one US Dollar (the base currency). The 'Loonie' is a gold-coloured coin that was introduced in 1987 and is produced by the Royal Canadian Mint at its facility in Winnipeg.
The most prevalent versions of the coin show a common loon, a bird found throughout Canada, on the reverse and Queen Elizabeth II, the nation's head of state, on the obverse

THE IMPORTANCE OF OIL FOR THE LOONIE

The USD/CAD is one of the three so-called “commodity pairs”, together with the following ones: AUD/USD, NZD/USD. These pairs are highly correlated to commodity (especially oil) fluctuations.

Canada is commonly known as a resource based economy being a large producer and supplier of oil. The leading export market for Canada is by far the United States making its currency particularly sensitive to US consumption data and economical health.
Gonçalo Moreira explains the correlations that exist between oil, the USD and the CAD: "If Canada is one of the world's largest producers of oil and oil is such a big part of the US economy, rising oil prices tend to have a negative effect on the USD and a positive effect on the CAD. Here you have two nice correlations.” Then he continues his analysis: “If you are willing to find a pair which is really sensitive to oil prices, then pick the CAD/JPY. Canada and Japan are at the extreme ends of production and consumption of oil. While Canada benefits from higher oil prices, Japan's economy can suffer because it imports nearly all of the oil it consumes. This is another interesting correlation to follow."

ASSETS THAT INFLUENCE USD/CAD THE MOST

  • Commodities: as we already explained, oil is number one, but gold and natural gas are also to be taken into account by the traders.
  • Currencies: JPY and EUR. Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, an NZD/USD.
  • Bonds: CSB (Canada Savings Bonds), CPB (Canada Premium Bond).
    • Indices: S&P/TSX Capped Composite Index (the headline index for the Canadian equity market), S&P/TSX Global Gold Index (index of global gold securities) and S&P/TSX Capped Energy Index (benchmarks for related derivative products of Canadian economic sectors).