USD/CAD trades lower to near 1.4030 amid talks to end US federal shutdown
- USD/CAD faces selling pressure as the Canadian Dollar demonstrates strength.
- Upbeat Canadian labor market data might push back BoC dovish bets.
- The US Senate is expected to advance the funding bill to end the government shutdown.
The USD/CAD pair trades 0.12% lower to near 1.4030 during the Asian trading session on Monday. The Loonie pair faces selling pressure as the Canadian Dollar (CAD) broadly outperforms its peers, except antipodeans, following the release of the upbeat Canada labour market data for October on Friday.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.13% | 0.37% | 0.00% | -0.32% | -0.00% | 0.17% | |
| EUR | -0.08% | 0.05% | 0.28% | -0.08% | -0.40% | -0.08% | 0.09% | |
| GBP | -0.13% | -0.05% | 0.24% | -0.12% | -0.44% | -0.13% | 0.04% | |
| JPY | -0.37% | -0.28% | -0.24% | -0.35% | -0.68% | -0.36% | -0.20% | |
| CAD | -0.00% | 0.08% | 0.12% | 0.35% | -0.33% | -0.01% | 0.17% | |
| AUD | 0.32% | 0.40% | 0.44% | 0.68% | 0.33% | 0.32% | 0.50% | |
| NZD | 0.00% | 0.08% | 0.13% | 0.36% | 0.01% | -0.32% | 0.17% | |
| CHF | -0.17% | -0.09% | -0.04% | 0.20% | -0.17% | -0.50% | -0.17% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Statistics Canada reported that the economy surprisingly created 66.6K fresh jobs, while it was expected to show a reduction in the labour force by 2.5K. In September, employers hired 60.4K fresh workers.
The Unemployment Rate also decelerated to 6.9% after staying steady in the last two months at 7.1%, which is the highest level seen since July 2021.
Signs of improving job market conditions are expected to have provided some relief to Bank of Canada (BoC) officials and would dampen market expectations of more interest rate cuts in the near term.
Meanwhile, the US Dollar (USD) trades broadly calm on hopes that the historically longest 40-day United States (US) government shutdown will end soon.
According to a Reuters report, Senators expect to vote Sunday night on advancing a House-passed bill that will be amended to combine the short-term funding measure, which would fund the government through January 2026, with a package of three full-year appropriations bills.
Such a scenario would improve the US consumer sentiment, which was impacted significantly due to the longest federal shutdown.
On Friday, the preliminary Michigan Consumer Sentiment Index came in at 50.3 in November, the lowest figure seen in three-and-a-half years. Investors expected the data to come in lower at 53.2 from the prior release of 53.6.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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