The Canadian Dollar (CAD) experienced a decline in value across the board on Friday, but managed to make gains against the weakening Greenback. This positive movement was fueled by an improvement in broad-market risk sentiment, following the release of upbeat US data, which helped alleviate concerns about a US recession among investors.
Next week, Canada is set to release its latest Consumer Price Index (CPI) inflation update. CAD traders will be closely watching for stable CPI figures to maintain a balanced sentiment in the market.
Market Analysis: CAD Softens Overall, Greenback Weaker
- Investors focused on US consumer sentiment data on Friday, leading to a decrease in demand for the Greenback.
- The University of Michigan’s Consumer Sentiment Index for August rose to 67.8, surpassing expectations and boosting market sentiment.
- Consumer 5-year Inflation Expectations remained steady at 3.0% in August.
- The upcoming Jackson Hole Symposium is expected to feature appearances from central bank policymakers.
Canadian Dollar Forecast: USD/CAD Pair Sees Fresh Highs
Thanks to a weaker Greenback, the Canadian Dollar (CAD) reached a three-week high on Friday, pushing the USD/CAD pair below the 1.3700 level.
Technical analysis shows that the pair faced resistance at the 50-day Exponential Moving Average (EMA) at 1.3728, with price action hovering between the 50-day EMA and the 200-day EMA at 1.3634.
Understanding the Canadian Dollar
The key factors influencing the Canadian Dollar include interest rates set by the Bank of Canada, the price of oil, the country’s economy, inflation, and trade balance. Market sentiment, particularly risk appetite, also plays a significant role in determining the CAD’s value. Additionally, the health of the US economy, as Canada’s largest trading partner, impacts the Canadian Dollar.
Overall, the Canadian Dollar’s performance against the Greenback and other currencies is influenced by a combination of economic indicators, market sentiment, and geopolitical factors.