Canadian Dollar to US Dollar (CAD/USD) Exchange Rate Recovers from Five-Week Low
The Canadian Dollar (CAD) is currently residing at 0.9256 against the US Dollar (USD), after trading between the regions of 0.9242 at the session low; in opposition to 0.9261 at the session’s high.
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The ‘Loonie’ has dipped to a five-week low against the ‘Buck’ following last week’s surprising US Durable Goods Orders and unemployment data which proved extremely favourable for the US economy.
This week however will see the release of further influential data for the US, which could lend to the US Dollar rallying higher against other major currencies.
An expert in the field Dean Popplewell commented: ‘The market is positioning itself for a busy US economic calendar next week. The “Loonie” has little support from the Canadian economic agenda until the end of the month, when we get GDP data for May. It remains at the mercy of the [US] Dollar’s moves.’
Currency experts Camilla Sutton and Eric Theoret commented on behalf of the Bank of Nova Scotia: ‘CAD sentiment has diverged from spot in July as a… build in the net long contrasts with a 1.3% decline in the currency, leaving the CAD vulnerable to a turn.’
Monday afternoon will see the release of US Composite and Services PMI data followed by Pending Home Sales figures. Services PMI is forecast to reach 59.8 in July, a fall from June’s 61.0. Meanwhile Pending Home Sales figures are expected to reach -5.2% in June, bettering May’s -6.9%.
However geopolitical conflicts are currently causing fluctuation in the currency market, after the recent downing of Malaysian Airlines passenger flight MH17. The recent geopolitical tensions including Russia and Ukraine caused oil prices to rise, allowing some support for the ‘Loonie’; however not enough to contend against the rallying ‘Buck’.
Economist Jennifer Lee stated: ‘It is the last Monday of July and global financial markets are having a mixed – truly mixed session. Geopolitical tensions in the Middle East the ceasefire in Gaza looks to be over and more sanctions against Russia (Japan is the latest to add to the list) are largely responsible for the inability of markets to head in one direction as there was no new economic news.’
For now the USD to CAD exchange rate looks to remain bullish, currently trading at 1.0806, however with such a significant data week ahead for the US, the ‘Buck’ could gain further support.
UPDATED 16:48 GMT 28 July 2014
Over the course of the North American session the Canadian Dollar was able to move away from its five-week low against the ‘Greenback’.
The US Dollar broadly softened as local Pending Home Sales data fell short of forecasts and investors’ speculated on whether this week’s US second quarter growth report will match estimates for expansion of 3.0%. Anything less would fail to wipe out the previous quarter’s contraction.
The Markit Services and Composite PMI’s for the US both came in well above the 50 mark separating growth from contraction.
The CAD/USD pairing hit a high of 0.9263.