The AUD/CAD pair was down more than 0.5% in the Asian trading session on Monday, near 0.9485. The cross is under heavy selling pressure as the Canadian dollar (CAD) continues to struggle due to rising oil prices amid a war in the Middle East involving the United States (US), Israel and Iran.
Canadian dollar price today
The chart below shows the percentage change of the Canadian Dollar (CAD) against the major currencies listed today. The Canadian dollar was the strongest against the euro.
| USD | Yavro | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.75% | 0.71% | 0.62% | -0.14% | 0.46% | 0.46% | 0.57% | |
| Yavro | -0.75% | -0.04% | -0.13% | -0.89% | -0.29% | -0.28% | -0.18% | |
| GBP | -0.71% | 0.04% | -0.06% | -0.84% | -0.24% | -0.24% | -0.14% | |
| JPY | -0.62% | 0.13% | 0.06% | -0.75% | -0.15% | -0.15% | -0.04% | |
| CAD | 0.14% | 0.89% | 0.84% | 0.75% | 0.60% | 0.61% | 0.71% | |
| AUD | -0.46% | 0.29% | 0.24% | 0.15% | -0.60% | 0.00% | 0.11% | |
| NZD | -0.46% | 0.28% | 0.24% | 0.15% | -0.61% | 0.00% | 0.11% | |
| CHF | -0.57% | 0.18% | 0.14% | 0.04% | -0.71% | -0.11% | -0.11% |
The heat map shows the percentage change of the base currency relative to each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select Canadian dollars from the left column and scroll horizontally to US dollars, the percentage change shown in the box represents CAD (base)/USD (quote).
Rising oil prices are a favorable scenario for CAD as Canada is the largest exporter of oil to the US.
WTI crude jumped more than 25% in Asian trade after a BBC report said several Iranian oil depots were hit by airstrikes in a joint US-Israeli operation over the weekend.
On Friday, Qatar’s Energy Minister Saad al-Kaabi warned in an interview with the Financial Times (FT) that the ongoing war in the Middle East could push the price of oil to $150 per barrel.
On the domestic front, investors will focus on Canadian employment data for February due out on Friday. Employment data will influence market expectations about the Bank of Canada’s (BoC) monetary policy outlook. The data is expected to show that employers hired 9,500 new workers after laying off 24,800 in January.
Meanwhile, the Australian dollar (AUD) is facing the heat of weakening demand for riskier assets amid the escalating war in the Middle East. S&P 500 futures fell more than 2% in early trade, reflecting a sharp weakening in investors’ risk appetite.
Questions about the Canadian dollar
Key drivers of 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 balance of trade, which is the difference between the value of Canada’s exports and its imports. Other factors include market sentiment—whether investors are buying riskier assets (risk-on) or seeking safe havens (risk)—with CAD-positive risk. As its largest trading partner, the health of the US economy is also a key factor for the Canadian dollar.
The Bank of Canada (BoC) has significant influence over the Canadian dollar by setting the interest rate at which banks can lend to each other. This affects interest rates for everyone. The main objective of the BoK is to keep inflation at the level of 1-3% by adjusting interest rates up or down. Relatively higher interest rates are generally positive for CAD. The Bank of Canada can also use quantitative easing and tightening to affect credit conditions, the former CAD-negative and the latter CAD-positive.
The price of oil is a major factor affecting the value of the Canadian dollar. Oil is Canada’s largest export, so the price of oil has an immediate effect on the value of the CAD. Generally, if the price of oil goes up, the CAD will also go up because the demand for the currency will increase. The situation is reversed if oil prices fall. Higher oil prices also lead to a more likely positive trade balance, which also supports the CAD.
Although inflation has always been seen as a negative factor for a currency because it lowers the value of money, in modern times it has actually been the opposite with the easing of cross-border capital controls. Higher inflation makes central banks tend to raise interest rates, which attracts more capital inflows from global investors looking for a profitable place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian dollar.
Macroeconomic data releases determine the health of the economy and can affect the Canadian dollar. Indicators such as GDP, manufacturing and services PMI, employment and consumer sentiment surveys can influence CAD direction. A strong economy is good for the Canadian dollar. Not only would it attract more foreign investment, but it could encourage the Bank of Canada to set interest rates, which would lead to a stronger currency. However, if economic data is weak, the CAD is likely to decline.
