USD/CAD Falls to 1.2500 as Oil Rally Cools Off

19 March 2021 | Updated: 19 March 2021

The USD/CAD traded higher in the European session on Friday but erased its daily gains and fell below the 1.2500 support at the open of the US market, as the fundamental scene remains erratic.

The loonie got hit badly on Thursday following a sharp decline in crude oil prices. With the price of crude oil stabilizing and creeping higher over the past 24 hours, the downward pressure on the CAD has gotten eased.

Aside from crude oil price action and a better-than-expected Canadian Retail Sales report for January, the fundamental scape for the USD/CAD has been a bit barren. Meanwhile, the US dollar witnessed a jab of strength following the Fed’s decision to refrain from extending the pandemic-induced supplementary leverage ratio (SLR) rules at the end of the month. These rules allowed banks to hold US treasuries and deposits on their balance sheets exempt from normal capital ratio requirements, which was decided upon by the Fed at the dawn of the Covid-19 crisis to prevent excessive selling pressure in the US treasury market.

Moving on, next week will likely be a quiet one for CAD traders, with just comments from the deputy governor of the Bank of Canada, Toni Gravelle, to focus on. Meanwhile, USD traders will be focusing on comments from Fed Chair Jerome Powell and other members of the Fed and preliminary Markit PMIs and Core PCE inflation data.

Recap of the Canadian Retail Sale
Canada released better-than-expected Retail Sales data for January, with the MoM pace of decline in headline sales at 1.1% versus the steeper 3.0% market forecast. Core retail sales also came in at better-than-expected numbers, with a drop of 1.2% MoM versus the widely-expected 3.0%.

The drop was reflective of the massive decline in the sales of some sectors that got shuttered with the closure of non-essential retail stores in Canada.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.