Canadian Dollar edges higher following Thursday’s decline as Retail Sales report approaches
Canadian Dollar Shows Modest Gains in Asian Markets
During Friday's Asian trading hours, the Canadian Dollar (CAD) is seeing slight improvement against other major currencies. The USD/CAD pair has edged down to around 1.3735, attempting to recover after Thursday’s notable decline, which was largely attributed to falling oil prices. Despite this, the pair remains close to its highest level in over two weeks at 1.3748.
As Canada stands as the leading oil supplier to the United States, any downturn in oil prices tends to put downward pressure on the Canadian Dollar.
The price of WTI crude has dropped sharply to approximately $92.50, after failing to reclaim the $100 mark. According to Reuters, this comes after former US President Donald Trump advised Israeli Prime Minister Benjamin Netanyahu against further strikes on Iranian energy facilities. Trump also stated he was unaware of Tel Aviv’s plans to target the South Pars gas field, the largest in the world.
Additionally, recent indications that European countries and Japan may assist in ensuring the flow of energy products through the Strait of Hormuz have also contributed to the decline in oil prices.
Canadian Dollar Volatility Driven by Central Bank Decisions
This week has seen significant fluctuations in the Canadian Dollar, particularly following the Bank of Canada’s (BoC) policy announcement on Wednesday, where interest rates were held steady at 2.25%.
Looking ahead to Friday, market participants are turning their attention to Canada’s January Retail Sales figures, set for release at 12:30 GMT. Analysts expect a 1.5% increase month-over-month, following a 0.4% decrease in December.
US Dollar Recovers Slightly After Previous Losses
Meanwhile, the US Dollar (USD) is posting modest gains after Thursday’s steep drop. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is up 0.2% to nearly 99.35 at the time of writing. On Thursday, the index had fallen by more than 1% to around 99.00.
The recent weakness in the US Dollar followed policy updates from the Bank of Japan (BoJ), Bank of England (BoE), and European Central Bank (ECB), all of which delivered hawkish signals regarding their interest rate outlook. This reduced concerns about diverging policies with the Federal Reserve (Fed).
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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