Canada's currency joined the battle for survival in the conditions of the coronavirus pandemic (COVID-19), continuing global trends. Following the example of other countries, the authorities of Canada have taken a number of stimulating measures to restore the national economy, which have had a fairly positive impact on the "loonie".
Traders were actively selling the "Canadian" currency earlier this week, fearing further collapse of the oil market and the intensification of the economic crisis in the country against this background. It can be recalled that this currency is very sensitive to the "swings" in the oil market and reacts sharply to any changes. Analysts say that they can unsettle the USD / CAD pair for some time. On the other hand, the pair reached the level of 1.4135 in the middle of the week. And on Friday morning, April 24, the USD/CAD pair was trading at a range between 1.4094- 1.4095. According to analysts, the purchase of the "loonie" made at the moment when the pair rises above the level of 1.4090, looks safe. In case of breakdown of the resistance level of 1.4272, experts recommend switching to long positions in anticipation of the growth of the USD/CAD pair to the level of 1.4600. But if the pair drops to a psychologically important barrier of 1.4000, we should expect a slide to support levels of 1.3900 and 1.3860, which will strengthen the negative dynamics of the "Canadian" currency.
Currency strategists at CIBC Bank predict further subsidence of the "loonie" to 1.4500 in the second quarter of this year. Given the dependence of the canadian dollar on fluctuations in the black gold market, which is currently experiencing unprecedented shocks, this is a predictable scenario.
The current macroeconomic reports of the Bank of Canada on monetary policy, published last week, added fuel to the fire. The Central Bank focused on a significant decline in productivity in the country, stressing that it will continue to decline. The Bank believes that a full recovery of the Canadian economy is not possible in the near future.
The situation right now undermines the position of the "loonie", depriving it of a chance to further strengthen. The unstable dynamics of CAD was also affected by the monetary incentives of the Bank of Canada aimed at supporting the national economy. These include a threefold reduction in the key rate in March 2020 (to 0.25%) and a possible expansion of the asset repurchase program. The regulator does not exclude that it will include not only the purchase of state bonds, but also bonds of the Canadian provinces if economic conditions worsen. Earlier, the Bank of Canada launched a large-scale asset purchase program, that is, quantitative easing (QE). It was required to inject additional liquidity into the market, but did not bring tangible results. Nevertheless, experts expect the situation to slowly go back to normal, which is possible only if the grip of the pandemic is eased and the number of cases and deaths from COVID-19 is reduced.
Many analysts say that the prospects for the Canadian dollar are unclear, foreshadowing a decline. Experts say that you should not expect to restore it in the near future. The loonie will have to gather all its strength for the next stage in the fight against the negative consequences of the pandemic. Against this background, the Canadian dollar may weaken further and, along with this, the USD/CAD pair will grow, mainly due to the strengthening of the dollar.
