The Canadian Dollar (CAD) showed a weaker performance on Tuesday compared to other major currencies, but managed to gain ground against the US Dollar (USD). The USD struggled across the board, leading to a third consecutive decline in USD/CAD pair.
Canada’s economic calendar is relatively quiet this week until Friday’s release of the Gross Domestic Product (GDP) figures for the second quarter. While Q2 GDP is expected to decrease slightly to 1.6%, all eyes are on the US Personal Consumption Expenditure – Price Index (PCE) data scheduled for the same release window.
Key Market Movements
- Greenback continues to face selling pressure amid expectations of rate cuts.
- CAD struggles to find momentum and is influenced by broader market trends.
- Federal Reserve’s dovish stance remains a major focus in the market.
- Rate markets predict a 35% chance of a 50 bps rate cut on September 18.
- Traders anticipate a total of 100 bps in rate cuts by the end of the year.
Canadian Dollar Price Forecast
Despite a lackluster performance on Tuesday, the CAD has been strengthening against the USD, pushing the USD/CAD pair below 1.3500 and testing six-month lows near 1.3450. With a downward trend in place, the pair has broken through the 200-day Exponential Moving Average (EMA) and is approaching the lower end of the congestion zone between 1.3600 and 1.3400.
USD/CAD Daily Chart
Canadian Dollar FAQs
The key factors influencing the Canadian Dollar include interest rates set by the Bank of Canada, Oil prices, the economy’s health, inflation, and Trade Balance. Market sentiment and the US economy also play a significant role in determining the CAD’s value.
Analysis: The Canadian Dollar weakened against most major currencies but gained strength against the US Dollar due to the USD’s broad decline. Market focus remains on upcoming economic data releases, particularly the US PCE inflation figures. Traders anticipate further rate cuts, which could impact currency movements. It is essential for investors to monitor these developments to make informed decisions about their investments and financial strategies.