The Canadian Dollar (CAD) faced a challenging start to the week, showing weakness against major currencies while holding steady against the Greenback. Market sentiment is uncertain as investors await the release of US inflation data later in the week, which could have a significant impact on the CAD’s performance.
This week, Canada has minimal economic events scheduled, leaving the CAD vulnerable to overall market sentiment. The upcoming Federal Reserve rate decision in September is also weighing on investors’ minds, with expectations of a rate cut of at least 0.25%.
Daily Market Summary: Impact of CPI Prints and Rate Expectations
- Canadian Building Permits declined in June, signaling a slowdown in the housing market.
- Fed’s inflation expectations decreased, leading to a shift in rate cut predictions for September.
- Rate markets are now pricing in a 100% chance of a 0.25% rate cut in September.
- US inflation data releases later in the week could influence market direction.
Canadian Dollar Forecast: Technical Analysis and Price Outlook
The CAD struggled against most major currencies on Monday, but showed slight gains against select pairs. The USD/CAD pair is currently testing key technical levels, with bullish momentum potentially reversing the CAD’s gains.
Technical indicators suggest that the CAD may face resistance at the 50-day EMA, but support at the 200-day EMA could limit downside movement.
Key Factors Driving the Canadian Dollar
The value of the Canadian Dollar is influenced by factors such as interest rates, oil prices, economic health, inflation, and trade balance. Market sentiment and the US economy also play a significant role in determining the CAD’s performance.
Understanding these key factors can help investors make informed decisions about trading the Canadian Dollar.