US Dollar to Canadian Dollar (USD/CAD) Exchange Rate Falling; Canada Revels in Data
The US Dollar is currently trading down against the Canadian Dollar (USD/CAD) at 1.0736 following an influential day for the ‘Loonie’ and poor figures for the ‘Buck’. This session has seen highs against the Canadian Dollar of 1.0766 whilst also lowering to 1.0706.
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The US Dollar has seen an influential week, by way of data, Federal Reserve statements, and the latest global tension—the fallen Malaysian Airlines flight.
Federal Reserve Chairwoman, Janet Yellen, gave support to the ‘Buck’ with her Semi-Annual Testimomies to the House and Senate Committees suggesting that the much anticipated interest rate hikes would be data driven.
However, speculation shrouds the Malaysian Airlines flight at present, and investors found themselves seeking safe haven assets such as gold instead of the US Dollar, causing the currency to dip; the ‘Buck’ avoided plunging whilst uncertainty surrounded the flight.
Friday has seen the release of the US University of Michigan Consumer Confidence data, which unfortunately has failed to meet forecasts.
The published figure of 81.3 is sitting far below June’s 82.5, and even further below the predicted 83.0.
Moreover the Leading Indicators figures only reached 0.3% in June, below the previous and the forecast 0.5%.
Alternatively, the Canadian Dollar has seen a highly positive and influential day with the release of Consumer Price Index figures which have proven favourable.
Inflation in Canada has risen to a two year high with June’s Consumer Price Index figures reaching 2.4%, above the previous and the forecast 2.3%.
The Canadian Dollar is currently, as a result of such favourable data, trading at a weeks high against other majors.
However, the Governor for the Bank of Canada, Stepehn Poloz, has recently commented that any rising inflation levels above the 2% target, will be short lived.
Forex expert, Blake Jespersen, has commented: ‘[Poloz] seems really confident that inflation is not going to persist at these levels. I guess we will have to see whether he was right or not.’
However economists are now hypothesising as to the nature of Canada’s prolonged 1.0% interest rates.
Poloz stated: ‘The interest rate where things settle out, things are all done, is probably going to be lower than what we thought in the past. So much debt has been taken on during the course of this downturn that every uptick in interest rates that we get, whether it’s two years from now or what have you, is going to hit the cash flow of ordinary people bigger than it did in the past.’
However, Poloz is insistent that interest rates will stagnate at 1.0% for some time, commenting further: ‘The most important point is that we are a long ways away from there. [There is] lots of room to grow before that becomes the question we have to ask.’
For now it appears that the Canadian Dollar will dominate in the USD/CAD relationship, however with a lack of influential data released next week for Canada, the ‘Loonie’ will be subject to global developments, shifts in the currency markets, commodity prices, along with US data figures to determine movements.
The current Canadian Dollar to US Dollar (CAD/USD) exchange rate is currently residing at 0.9316.