CAD holds firm amid an uptick in crude oil prices
Friday 24 March, 2023
Daily Currency UpdateUSD/CAD is gaining strong positive traction today. The anti-risk movement is raising demand for the safe-haven USD and is turning out to be a key element acting as a tailwind for the USD/CAD pair. The pair is currently trading above the 1.3700 mark, though a combination of factors keeps a lid on any meaningful upside.
Crude Oil prices remained on positive footing despite doubts that rising tensions in the Middle East could disturb supply, especially after a US air strike on Iran-backed groups. This is supporting the commodity-linked Loonie which, along with subdued USD price action, is creating a headwind for the USD/CAD pair. Apart from this, strong oil prices are pushing USD/CAD upward and producing short-term positive movements today. West Texas Intermediate crude oil is trading around 68.34.
Key MoversThe USD Index (DXY), is trading flat overall, alternating between small gains and losses to end up around 102.60 at the end of the week. Market participants continue to digest Wednesday’s dovish hike by the Federal Reserve and the accommodative note of Powell’s press conference. The speculation of a potential Fed pivot in the short term should keep weighing on the dollar. Even though inflation remains high, the resilience of the US economy and the aggressive narrative from Fed speakers are counteracting that view for the time being.
Today, the US Census Bureau reveals that durable goods orders decreased by 1%, or $2.6 billion, in February to $268.4 billion. This reading followed January's decline of 5% (revised from -4.5%) and came in weaker than the market expectation for an increase of 0.6%. The market’s immediate reaction was positive and the DXY is keeping its traction after this data release, even rising 0.6% on the day to 103.20.
EUR/USD is under renewed bearish pressure today, falling below 1.0750 after having reached its highest level since early February at 1.0930 on Thursday. Although the upbeat Purchasing Managers’ Index (PMI) data from Germany and the Eurozone, safe-haven movements are still dominating the markets shown by heavy losses seen in European banking stocks.
The sterling is down noticeably after mostly lackluster numbers out of the UK. In the European session, the GBP/USD pair was trading at 1.2200 levels, down around 0.60%. Recent data releases in the UK show business activity and manufacturing weakened in March. The services PMI numbers eased to 52.8, down from 53.5 in February, and just shy of the anticipated 53.0. Manufacturing has declined for eight straight months, falling to 48.0 versus 49.3 in February and lower than the expected 52.8 points. Business activity continues to show modest expansion and is the driver behind economic growth in the UK.
- EUR/CAD: 1.4772 - 1.4894 ▼
- GBP/CAD: 1.6781 - 1.6863 ▼
- AUD/CAD: 0.9141 - 0.9184 ▲
- USD/CAD: 1.3631 - 1.3802 ▼