The Canadian Dollar (CAD) is experiencing slight gains against the US Dollar (USD) as the USD weakens and oil prices take a breather. Since oil is Canada’s main export, the CAD’s momentum is limited. The USD/CAD pair is relatively flat on Thursday, down 0.2% and hovering near 1.3500. With minimal economic data scheduled for release, the CAD’s performance will continue to be influenced by oil prices and the US Dollar Index.
Friday’s Gross Domestic Product (GDP) figures will be the main economic data point for Canada this week. The forecast for July’s GDP is a modest 0.1% growth compared to the previous month’s -0.2%. While inflation remains a concern, the Bank of Canada (BoC) has been trying to lower inflation expectations by suggesting the possibility of higher interest rates. BoC officials, including Governor Macklem and Deputy Governor Kozicki, have been vocal about the need for elevated interest rates as inflation remains stubbornly high.
In terms of technical analysis, the CAD has gained against the USD since September but is struggling to maintain momentum, with the USD/CAD pair likely to close near 1.3500 for the month. Support levels include the 200-day Simple Moving Average near 1.3450, while resistance is seen around 1.3650. The CAD’s performance is closely tied to oil prices, and the currency is heavily influenced by fluctuations in barrel prices.
In summary, the Canadian Dollar is seeing minor gains against the US Dollar as the USD weakens and oil prices take a breather. With limited economic data, oil prices and the US Dollar Index will continue to drive the CAD’s performance. The CAD has struggled to maintain momentum and is likely to close the month near 1.3500. The Bank of Canada has been attempting to lower inflation expectations through talk of higher interest rates. The CAD’s performance is closely tied to oil prices, and it is one of the top oil exporting countries globally.
