The Canadian dollar rose against the greenback after a U.S. report showed orders for durable goods increased in July more than economists forecast, boosting hopes that the U.S. economy was not heading for another recession. The U.S. is Canada’s main trading partner so its economy will spill over across the border.
USDCAD has been in a sort of a range all week but it seems to have narrowed today as U.S. Fed Chairman Ben Bernanke’s speech is getting closer. A breakout from the range will happen depending on what Bernanke will unveil in his speech in Jackson Hole, Wyoming on Friday where global central bankers, economists, and academics are gathering for a summit.
A year ago, the Fed launched a second round of quantitative easing in an effort to revive the struggling U.S. economy, which included $600 billion of U.S. debt purchases to support the recovery, a program that ended in June. Now all eyes are on whether a third round of measures will be introduced this year.
A boost in the U.S. economy will certainly boost risk appetite and demand for risk and commodity-linked currencies like the Canadian dollar. A revived U.S. economy will help the Canadian economy as well.
Meanwhile, rising crude oil prices today have also helped support the Canadian dollar which is a commodity-linked currency as Canada is a major oil exporter.