Forex News
OCBC strategists Sim Moh Siong and Christopher Wong describe USD/SGD as slipping on broad USD weakness and expects two‑way, range‑bound trading in the near term, with resistance around 1.2780–1.2850 and support near 1.2720–1.2670. They note that Singapore Dollar (SGD) is likely to behave as a regional defensive currency, holding up better than higher‑beta FX if geopolitical uncertainties persist, supported by stronger domestic data.
Defined range and defensive SGD
"USD/SGD slipped amid broad USD pullback. Pair was last at 1.2745 levels. Daily momentum and RSI indicators are not showing a clear bias. 2-way trades likely in the interim. Resistance at 1.2780/1.28 levels (100 DMA, 38.2% fibo retracement of 2026 low to high), 1.2850 (200 DMA, 23.6% fibo). Support at 1.2720 levels (61.8% fibo), 1.2670 (76.4% fibo)."
"On relative terms, SGD can continue to trade like a regional defensive play, holding up better against higher-beta FX should geopolitical uncertainties continued to persist. "
"On data released yesterday, Singapore’s industrial production accelerated to 10.1% YoY in March, picking up speed from the upwardly revised February readings of 3.3% YoY. Electronics was the outperformer again at 30% YoY, followed by precision engineering, general manufacturing while output for both the biomedical and chemicals clusters both fell."
"Our economists noted that 1Q26 GDP growth is likely to be revised up from the advance estimate of 4.6% YoY to 5.2% YoY ceteris paribus as the manufacturing sector growth is likely to be notched higher to 7.9%YoY based on the March print versus the advance estimate of 5.0% YoY."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI US Oil reaches a two-week high of around $98 amid persistent geopolitical tensions.
- Prolonged closure of the Strait of Hormuz continues to disrupt nearly 20% of global supply.
- Escalation risks fuel supply concerns and reinforce the market’s bullish bias.
West Texas Intermediate (WTI) US Oil trades around $98.00 on Tuesday at the time of writing, up 3.21% on the day, reaching its highest level since mid-April. The rise in Crude prices comes amid heightened geopolitical tensions in the Middle East, where negotiations between the United States (US) and Iran remain deadlocked.
According to reports cited by Reuters, US President Donald Trump considers the peace proposal submitted by Tehran insufficient, particularly due to the lack of commitments regarding Iran’s nuclear program. This stance keeps the diplomatic stalemate in place and prolongs the closure of the Strait of Hormuz, a strategic route for around 20% of global Oil supply.
This major supply disruption is mechanically supporting Oil prices, bringing WTI closer to the psychological $100 level. At the same time, Brent is also advancing, reflecting broad-based tightness across energy markets.
Concerns extend beyond the Oil market alone. United Nations (UN) Secretary-General Antonio Guterres has warned of a potential global food crisis if the situation persists, highlighting the systemic consequences of a prolonged closure of the strait.
In this context, some market participants expect further upside in prices if disruptions continue. Citibank outlines a scenario in which Brent Oil could reach $150 per barrel should the Strait of Hormuz remain closed through the end of June.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
TD Securities analysts expect Canada’s Spring Economic Update to show a CAD 60 billion deficit over 2026–27, slightly better than the prior budget shortfall. They attribute the improvement to stronger nominal Gross Domestic Product (GDP) boosting revenues and only modest new spending, while seeing limited changes to borrowing plans as T-bills and the Canada Strong Fund structure absorb funding needs.
Stronger revenues offset modest new spending
"The Federal Government is scheduled to present its Spring Economic Update (SEU) at 16:00ET on Tuesday, where we look for a $60bn deficit over 2026-27 for a modest improvement from the $65.4bn shortfall in Budget 2025."
"This improvement stems from a combination of stronger budget revenues following upward revisions to nominal GDP, along with modest new spending in the update itself."
"We do not expect material changes to 2026-27 borrowing projections, with T-bills able to absorb new spending measures."
"The new Canada Strong Fund will also require ~$8bn/yr in funding (through 28-29) with its $25bn endowment spread over three years."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver slides as stalled US-Iran talks keep the US Dollar supported.
- Rising Oil prices fuel inflation risks and push yields higher, weighing on non-yielding metals.
- XAG/USD remains capped below key SMAs on the daily chart, keeping the near-term bias bearish.
Silver (XAG/USD) trades with a downside bias on Tuesday, down over 2.5%, as a higher-for-longer interest rate outlook continues to weigh on price action. Rising inflation risks, driven by elevated Oil prices amid ongoing Middle East supply disruptions, are pushing US Treasury yields higher, reducing the appeal of the non-yielding metal. At the time of writing, XAG/USD is trading around $73.25, its lowest level since April 13.
Meanwhile, a lack of progress in US-Iran talks to end the war keeps the US Dollar (USD) firmly supported, adding further pressure on XAG/USD. While Silver typically benefits from geopolitical tensions, rising expectations of tighter monetary policy by global central banks remain a key headwind for the metal, which is currently down over 20% since the US-Iran war began, despite recovering from its March low.
Attention now turns to the Federal Reserve’s (Fed) monetary policy decision due on Wednesday, where traders widely expect the central bank to keep interest rates unchanged. Inflation in the US remains sticky and above the Fed’s 2% target, with the recent surge in Oil prices adding further pressure. As a result, the focus will be on forward guidance, with markets awaiting clarity on the future path of interest rates. Higher borrowing costs increase the opportunity cost of holding non-yielding assets like Silver.
Technical Analysis:
In the daily chart, XAG/USD maintains a bearish near-term bias as it trades below both the 100-day and 50-day Simple Moving Averages (SMAs), which are closely aligned and showing early signs of a bearish crossover, keeping the near-term bias tilted to the downside.
Momentum indicators echo this soft tone, with the Relative Strength Index (RSI) hovering near 42 and the Moving Average Convergence Divergence (MACD) line slipping just below zero, while a subdued Average Directional Index (ADX) around 12 suggests a weak and potentially range-bound trend.
On the upside, the moving average cluster between $78.50-$79.50, where the 50-day and 100-day SMAs converge, marks initial resistance and would need to be reclaimed to ease the current bearish pressure. The next meaningful resistance is seen near the $90 psychological level.
On the downside, the $70 level marks initial support, followed by the 200-day SMA near $62.40, which stands out as the next major structural support.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Standard Chartered strategists Christopher Graham and John Davies highlight that growing labour market slack and fragile domestic demand should limit second-round inflation effects in the United Kingdom (UK). With vacancies at multi-year lows and payrolls down, workers’ wage bargaining power and firms’ pricing power are seen weaker than post-COVID, while the prospect of broad fiscal support to offset higher energy prices is viewed as much less likely than in 2022–2023.
Labour slack and weaker demand dynamics
"Indeed, growing labour market slack (with vacancies now at their lowest level in more than 10 years, and payrolls down 120k over the past 18 months), as well as fragile domestic demand, will likely mitigate the risk of second-round effects, with workers holding significantly less wage bargaining power and firms less pricing power than in the post-COVID environment."
"Added to this, the prospect of widespread fiscal support in the face of higher energy prices looks much less likely."
"The degree of support in 2022 and 2023 likely stretched out the inflation shock, while mitigating downside economic risks."
"This time around, the macroeconomic environment looks very different."
"Underlying demand was weaker back then, but it still shows there is precedent for looking through energy price shocks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD loses ground amid renewed risk aversion.
- Tensions between the US and Iran support demand for safe-haven assets.
- Diverging monetary policy expectations between the Fed and the RBNZ frame price action.
NZD/USD trades around 0.5890 on Tuesday, down 0.35% on the day, after failing to hold above the 0.5900 level. The pair moves lower as the US Dollar (USD) strengthens, supported by increased demand for safe-haven assets.
The Greenback benefits from persistent geopolitical uncertainty linked to the stalemate in negotiations between the United States (US) and Iran. US President Donald Trump is unlikely to accept Iran’s proposal regarding the Strait of Hormuz, while the lack of progress on the nuclear issue continues to fuel risk aversion and underpin the US currency.
At the same time, the US Dollar is supported by expectations of higher-for-longer interest rates from the Federal Reserve (Fed). Markets widely anticipate a pause at this week’s meeting, with rates expected to remain within the 3.50%-3.75% range. However, the resilience of certain economic indicators, such as the Conference Board Consumer Confidence Index, which rose to 92.8 in April, supports US yields and, in turn, the US currency.
Meanwhile, investors remain cautious ahead of the Federal Open Market Committee (FOMC) decision on Wednesday, closely watching for signals on the future policy path, even as markets continue to price in monetary easing later in the year.
On the New Zealand side, the New Zealand Dollar (NZD) finds some support from expectations of a more restrictive monetary policy stance. The Reserve Bank of New Zealand (RBNZ) could maintain a cautious tone or even consider tightening to bring inflation back to its 2% target midpoint. Markets are already pricing in a potential rate hike as early as May, following stronger-than-expected inflation data.
This contrast between a steady Fed supported by elevated yields and a potentially more hawkish RBNZ helps limit the downside in NZD/USD.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.14% | 0.08% | 0.36% | 0.03% | 0.37% | 0.47% | |
| EUR | -0.06% | 0.06% | 0.00% | 0.28% | -0.06% | 0.25% | 0.40% | |
| GBP | -0.14% | -0.06% | -0.06% | 0.22% | -0.11% | 0.21% | 0.33% | |
| JPY | -0.08% | 0.00% | 0.06% | 0.28% | -0.05% | 0.26% | 0.38% | |
| CAD | -0.36% | -0.28% | -0.22% | -0.28% | -0.34% | -0.03% | 0.11% | |
| AUD | -0.03% | 0.06% | 0.11% | 0.05% | 0.34% | 0.32% | 0.47% | |
| NZD | -0.37% | -0.25% | -0.21% | -0.26% | 0.03% | -0.32% | 0.12% | |
| CHF | -0.47% | -0.40% | -0.33% | -0.38% | -0.11% | -0.47% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- EUR/USD rebounds from intraday lows as traders await the Fed's interest rate decision due on Wednesday.
- The US Dollar eases slightly, but geopolitical tensions and firm yields keep downside pressure limited.
- Traders also monitor US-Iran developments as stalled talks and Hormuz disruptions keep markets cautious.
The Euro (EUR) trims a part of its intraday losses against the US Dollar (USD) on Tuesday as the Greenback loses momentum, with traders repositioning ahead of the Federal Reserve’s (Fed) interest rate decision due on Wednesday, while continuing to monitor developments in the Middle East. At the time of writing, EUR/USD is trading around 1.1707, rebounding from an intraday low of 1.1677.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.66, easing from a daily high of 98.88, up nearly 0.18% on the day. However, the downside remains limited amid persistent uncertainty surrounding US-Iran tensions and firm US Treasury yields, which continue to underpin the Dollar.
The Fed is widely expected to keep interest rates unchanged in the 3.50%-3.75% range, with the outcome largely priced in by markets. Instead, the focus will be on forward guidance, as policymakers navigate risks to both sides of their dual mandate. The recent surge in Oil prices is feeding into inflation expectations, a trend increasingly reflected in recent economic data. This has prompted traders to shift toward a higher-for-longer rate outlook, compared with earlier expectations of two rate cuts before the US-Iran war escalated.
At the same time, traders are pricing in at least two rate hikes by the European Central Bank (ECB) amid mounting inflation risks from higher Oil prices, although the central bank is expected to hold rates steady at 2.00% at Thursday’s meeting as policymakers balance persistent inflation pressures against risks to economic growth, particularly given the Eurozone’s reliance on imported energy.
ECB Bank Lending Survey for the first quarter of 2026, released on Tuesday, showed inflation expectations rising across horizons. Inflation expectations one year ahead rose sharply to 4.0% in March from 2.5% in February, while expectations three years ahead increased to 3.0% from 2.5%, and five-year expectations edged up to 2.4% from 2.3%.
On the geopolitical front, efforts to end the US-Iran war appear to have stalled, with the Strait of Hormuz still largely disrupted, keeping Oil supply tight. Iran is expected to submit a revised peace proposal in the coming days, according to CNN, citing sources, after US President Donald Trump and his national security team expressed skepticism over Tehran’s earlier offer, which deferred nuclear negotiations to a later stage.
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
Read more.Next release: Wed Apr 29, 2026 18:00
Frequency: Irregular
Consensus: 3.75%
Previous: 3.75%
Source: Federal Reserve
- USD/JPY stabilizes after a more hawkish-than-expected Bank of Japan announcement.
- Middle East tensions and a stronger US Dollar limit downside in the pair.
- Markets remain focused on the Fed and the risks of energy-driven inflation.
USD/JPY trades around 159.50 on Tuesday, up modestly by 0.07% on the day, after briefly falling below the 159.00 level following the Bank of Japan’s (BoJ) policy decision. The pair quickly recovered most of its losses, supported by renewed demand for the US Dollar (USD) in a context of persistent geopolitical risks.
The Bank of Japan left its key interest rate unchanged at 0.75%, in line with expectations, but adopted a more hawkish stance than anticipated. The 6-3 split vote, with three members favoring a rate hike, along with an upward revision to inflation forecasts, strengthens expectations for monetary tightening as early as this summer. Governor Kazuo Ueda highlighted that real interest rates remain significantly low and warned about upside inflation risks, reinforcing a hawkish bias.
This more restrictive stance initially supported the Japanese Yen (JPY), also helped by intervention warnings from Japanese authorities in response to currency volatility. However, Yen’s gains remain limited by economic concerns linked to energy supply disruptions, particularly around the Strait of Hormuz, which weigh on an economy heavily dependent on energy imports.
At the same time, the US Dollar (USD) benefits from its safe-haven status amid an uncertain environment. Ongoing tensions between the United States (US) and Iran, as well as the lack of progress in diplomatic talks, maintain a risk-off mood. This backdrop supports the Greenback and allows USD/JPY to rebound despite the BoJ’s hawkish signals.
Meanwhile, US data indicated resilient consumer sentiment, with the Conference Board Consumer Confidence Index rising to 92.8 in April. This relative strength in the US economy, combined with expectations that the Federal Reserve (Fed) will keep interest rates unchanged within the 3.5%-3.75% range, continues to support US yields and, in turn, the US Dollar.
MUFG analysts believe the JPY’s rebound may prove temporary, noting that short positions on the Japanese currency are being rebuilt amid unfavorable external conditions. BNY economists highlight rising stagflation risks in Japan, while Danske Bank sees an increasing probability of a rate hike this summer. TD Securities also points out that the low-liquidity Golden Week period could heighten intervention risks if the pair continues to move higher.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.12% | 0.18% | 0.11% | 0.38% | 0.13% | 0.41% | 0.47% | |
| EUR | -0.12% | 0.06% | -0.02% | 0.24% | -0.01% | 0.25% | 0.35% | |
| GBP | -0.18% | -0.06% | -0.06% | 0.19% | -0.05% | 0.21% | 0.29% | |
| JPY | -0.11% | 0.02% | 0.06% | 0.27% | 0.02% | 0.28% | 0.35% | |
| CAD | -0.38% | -0.24% | -0.19% | -0.27% | -0.25% | 0.00% | 0.09% | |
| AUD | -0.13% | 0.01% | 0.05% | -0.02% | 0.25% | 0.27% | 0.37% | |
| NZD | -0.41% | -0.25% | -0.21% | -0.28% | -0.01% | -0.27% | 0.07% | |
| CHF | -0.47% | -0.35% | -0.29% | -0.35% | -0.09% | -0.37% | -0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- USD/CAD added 0.33% on Tuesday, recovering near 1.3670 but still trading over 2% below the March peak around 1.3950.
- WTI crude surged near $100 per barrel on Tuesday after Trump pushed back on Iran's latest ceasefire proposal.
- The BoC was expected to hold rates at 2.25% on Wednesday, with the Fed also seen leaving its range at 3.50% to 3.75%.
USD/CAD climbs 0.33% on Tuesday, settling close to 1.3670 after a steady grind higher off Monday's intraday low near 1.3600. The pair posted a series of higher highs and higher lows through the European and North American sessions, with a brief poke above 1.3690 marking the session peak before a modest pullback into the close. The recovery move keeps USD/CAD more than 2% below the March peak around 1.3950.
The Canadian Dollar (CAD) drew limited support from a sharp rally in crude Oil on Tuesday, with WTI extending gains for a seventh straight session and trading close to $100 per barrel as US President Donald Trump pushed back on Iran's latest ceasefire proposal. Tehran's nuclear program remains the primary sticking point in negotiations, with the Strait of Hormuz still effectively closed in the ninth week of the conflict and tanker flows through the chokepoint near zero. Tuesday's US Consumer Confidence April print added little fresh direction ahead of the main event.
Focus now turns to Wednesday's central bank double-header. The Bank of Canada (BoC) is widely expected to leave the overnight rate at 2.25%, with attention on whether the policy statement keeps the door open to tightening after the March meeting flagged renewed inflation risks tied to elevated energy prices. The Federal Reserve (Fed) is also seen holding the federal funds rate range at 3.50% to 3.75% later in the session, extending Chair Jerome Powell's wait-and-see stance as the energy shock continues to feed into US inflation. Powell's term expires in May, with Trump pick Kevin Warsh tapped to fill the empty seat despite some congressional challenges, a factor likely to limit the impact of any hawkish surprise.
USD/CAD 15-minute chart
Technical Analysis
In the fifteen-minute chart, USD/CAD trades at 1.3672. The pair holds a mild bullish intraday bias as price remains comfortably above the day’s open at 1.3615, suggesting dips are still being supported despite the latest consolidation. The Stochastic RSI has retreated toward the lower band after earlier overbought readings, hinting that the recent pullback is more a pause within the short-term advance than a full-fledged reversal.
On the downside, initial support is seen at the intraday pivot area just under the current price, with stronger underlying demand emerging closer to the day’s open near 1.3615. With no nearby technical resistance levels defined on this timeframe, upside progress may be guided more by intraday momentum swings, and a sustained hold above 1.3615 would keep the constructive tone intact while Stochastic RSI unwinds its earlier overbought stretch.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on April 28 at 16:45 GMT to say Kevin Warsh, not Kevin Hassett, is the likely Fed Chair replacement.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
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