Canadian Dollar Falls As Crude Oil Prices Linger in the Negative Zone

Today, the Canadian dollar is the worst-performing currency, and slightly weaker-than-expected retail sales numbers aren’t helping matters. The loonie is being dragged down by persistent oil price weakness, as well as the general negative sentiment.

Retail sales in Canada rose 4.2% MoM to C$ 56.2 billion in June, below 5.0% MoM expectations. Sales increased in 8 of 11 subsectors, accounting for 69.5% of retail sales. trade. Key retail sales, excluding petrol stations and car and parts dealers, were up 4.6% MoM. Overall, second-quarter sales fell 0.7% QoQ. According to preliminary estimates, in July sales will fall by -1.7% m/m.

Crude oil prices are continuing to decline as the weekend approaches. After closing in the red for the sixth day in a row on Friday, the barrel of West Texas Intermediate continued to fall during the first half of the day, losing 1.4 percent on the day to $62.97. WTI has dropped more than 7% in the last week.

Oil prices are being weighed down by a weakening demand picture, as well as fresh concerns about the rising number of coronavirus cases, particularly in Asia. The API and the EIA both reported larger-than-expected reductions in US crude oil stockpiles earlier this week, but this data failed to help WTI launch a major recovery.

Canadian Dollar: USD/CAD Retreats From Recent Highs

During trading hours on Friday, the USD/CAD pair extended its surge,  as the Canadian dollar fell reaching 1.2949, its highest level since January. The pair fell somewhat in the early American session and was last seen up 0.48 percent on the day at 1.2891.

The strong selling pressure surrounding crude oil prices and the uninterrupted USD strength has helped the USD/CAD pair to maintain its positive momentum since the beginning of the week. The barrel of West Texas Intermediate is currently trading at $62.75, down nearly 7% on the week and down 1.75 percent on the day. The US Dollar Index, on the other hand, is consolidating its gains near the 9-month high of 93.72 hits earlier in the day.

Retail Sales increased by 4.2 percent monthly in June, according to Statistics Canada statistics released on Friday. Even though this reading was significantly below the market’s anticipation of a 4.4 percent increase, it did not cause a significant market reaction.