Canadian dollar weakens as oil prices pullback
Friday 17 March, 2023
Daily Currency UpdateUSD/CAD bottomed out, hitting an intra-day low of 1.36830 before reversing its weekly losses to trade above 1.37500. Crude oil prices retreated from an intra-day high of 69.630 to fall near 66.11. This pullback in oil prices put downward pressure on the CAD. With the Bank of Canada becoming the first major central bank to pause its rate hike cycle, any movement for the USD/CAD pair will most likely be positive.
Key MoversTo end the week, the dollar index (DXY) trades weaker against other major currencies. Volatility over the past week appears to have subsided, reducing demand for the US dollar in favor of other currencies with the DXY falling below 104.200. Next week, the U.S. Federal Reserve will announce its interest rate decision, with a nearly 90% probability of a 25 basis points increase. Today’s key economic data for the U.S. features February industrial production and the preliminary Michigan Sentiment index. US Federal Reserve data showed industrial production in the US remained unchanged in February at 0.3%. Consumer sentiment came in weaker today at 63.4 versus the expected 64.5, and down from 67.0. The euro hit a 2-day intraday high of 1.0670 against the USD as optimism regarding the health of the European and US banking sectors lifted the currency pair. The European Central Bank (ECB) announced a 50-basis point hike yesterday in line with expectations. However, with banking sector volatility the ECB also worried that if they didn't implement the half-point increase, investors might view their lack of action as cause for concern. While no hints were given by the central bank regarding future monetary policy, President Christine Lagarde reiterated that the ECB will continue to be reliant on data when battling inflation. Year-over-year February Consumer Price Index (CPI) data for the Eurozone was down to the forecasted 8.5%. The pound advanced against the dollar for the second consecutive day as the pair topped an intra-day high near 1.21640 before retreating to trade around 1.21360. The expectation that the Fed will increase its rate by 25 basis points, largely due to the collapse of two US banks, has put downward pressure on the USD and increased bullish support towards the GBP/USD.
- EUR/CAD: 1.4543 - 1.4635 ▲
- GBP/CAD: 1.6608 - 1.6715 ▲
- AUD/CAD: 0.912 - 0.92 ▲
- USD/CAD: 1.3679 - 1.3765 ▲