Experts consider maintaining stability as one of the important tasks facing the Canadian currency. Paired with the US dollar, which is the leading one, the "loonie" can sharply decline, mirroring the multi-directional dynamics of the US currency.
According to analysts, the USD/CAD pair is kept afloat by its driver - the dollar, which the Fed has long worried about, pouring huge sums into the US economy. Earlier, the regulator announced the purchase of corporate bonds worth up to $ 750 billion. This measure was required to form a portfolio of corporate bonds. This increased pressure on the USD/CAD pair, jeopardizing the stability of the dollar and creating a tense situation for the Canadian dollar.
The USD/CAD pair fell noticeably earlier this week, showing a correctional impulse. Subsequently, this pair was adjusted at 1.3567, within which it remained until the end of the week. On Thursday morning, June 18, the USD/CAD pair was trading near the level of 1.3563, but it lost some of its positions later, going to 1.359 - 1.3560.
The current situation, in which the loonie turned out to be highly dependent on the dynamics of the dollar, keeps the market in suspense. Experts fear the collapse of the Canadian dollar, which is reflected in the dollar's "roller coaster". However, if the USD can withstand adverse market events, then the CAD does not have such a margin of safety. Analysts believe that the Canadian currency may be on the verge of a cliff.
The loonie is keeping afloat factors such as rising oil prices and relatively positive macro statistics. At the same time, the indicated currency reacts quite calmly to restrained-optimistic reports on the national economy. According to studies, the volume of production sales in the country declined by 28.5% m/m in April of this year. This is a rather serious drop, since the level of decline amounted to 9.2% m/m in March. Moreover, analysts expressed optimism and predicted a decline in the April indicator by 18.7% m/m.
At this point, the Canadian dollar is similar to the US currency: the dynamics of the dollar also experienced fluctuations depending on economic data, but it does not bring drastic changes for the currency. The actions of the monetary authorities and the general state of the national economy are crucial for the US currency. At the same time, the Canadian dollar can give a head start to the American one, since now the "loonie" receives good support from rising oil prices.
The USD/CAD pair continues to be in a downward trend in the current situation, which has persisted over the past three months. According to experts, it will continue and will largely depend on the dynamics of the key world currency - USD, which in case of an adverse situation, for example, a sharp increase in the second wave of the COVID-19, can create a strong bias in the USD/CAD pair. Earlier, in March this year, against the backdrop of an outbreak of coronavirus infection, the pair reached a local 20-year high, trading near the level of 1.4668. In the future, the USD/CAD pair is expected to rapidly decline and still can not get out of the bearish spiral. As a result, forecasts of currency market strategists, even the most optimistic, do not go beyond 1.3900.
Many analysts are quite pessimistic about the Canadian dollar, but believe that it has a chance of recovery. The question is, will it use the loonie? Moreover, this currency does not have such power as the US dollar. According to experts, the main thing for CAD is to hold on to the positions won and not fall to very low indicators, from which it will take a very long time to get out.
