The Canadian Dollar (CAD) showed signs of recovery on Wednesday, but still faced challenges against the Greenback following the release of US Consumer Price Index (CPI) data. The CAD’s performance remains mixed as the US inflation print met expectations but failed to meet investor forecasts.
With Canada offering limited economic data this week, the CAD is vulnerable to market movements. The recent uptrend for the Canadian Dollar may be coming to an end, with CAD traders awaiting next week’s Bank of Canada (BoC) CPI report.
Key Points from the Market Today
- Canadian Dollar slightly down against the Greenback, staying within a narrow range.
- US CPI figures in line with market predictions, easing price pressures.
- Investors anticipated further declines after recent US PPI data.
- Core CPI down to 3.2% YoY, as expected.
- Both headline and core CPI up 0.2% MoM, meeting forecasts.
- Annualized CPI at 2.9% in July, below projected 3.0%.
Canadian Dollar Forecast: CAD Streak Likely to Stall Near 1.3700
While the Canadian Dollar saw marginal gains, it continues to face pressure from the US Dollar. The USD/CAD pair remains below the 50-day Exponential Moving Average (EMA), with limited recovery for the CAD.
USD/CAD is struggling to extend the Canadian Dollar’s gains, hovering around the 0.1% mark during midweek trading. Despite this, the USD/CAD pair has not dropped significantly below the 200-day EMA at 1.3632.
Factors Affecting the Canadian Dollar
Several key factors impact the value of the Canadian Dollar, including interest rates set by the Bank of Canada, oil prices, economic health, inflation, and trade balance. Market sentiment and the US economy also play a significant role in influencing the CAD.
Understanding these factors can help investors make informed decisions when trading the Canadian Dollar.