Lower oil prices continue to undermine Loonie
Friday 21 April, 2023
Daily Currency UpdateUSD continued its strength against the Canadian dollar and nearly reached 2.0. This was due to multiple factors including a recent slump in crude oil prices which continued to undermine the Loonie. This slump coupled with market anticipation of the Federal Reserve hiking rates in May lifted the USD to the weekly high. Data published today by Statistics Canada show retail sales declined by 0.2% month-over-month, following January's 1.4% increase. This reading came in better than the market expectation for a decrease of 0.6%. This data release didn’t have an impact on the Canadian dollar's valuation. USD/CAD was last seen up 0.4% on the day at around 1.353 levels.
West Texas Intermediate (WTI) oil prices moved forward for the first time this week, following cuts from the Organization of the Petroleum Exporting Countries, to 2023 peaks from the 83.00 levels on April 12. The buying interest for WTI managed to push the black gold past the 78.00 level.
Key MoversDuring today's trading sessions, the greenback paced towards its first weekly gains in two months as markets raised the stakes on the Federal Reserve increasing the interest rates in the May meeting. Fed officials have commented that inflation in the United States remains on the high side and the interest rates must keep rising along with it. Markets are anticipating a 25 basis point hike by the Fed in May as well as another corrective pullback in US yields across the curve, both of which are providing a strong cushion for the greenback. According to the Purchasing Managers’ Index (PMI) data, business activity in the US private sector grew in the month of April with S&P Global Composite PMI rising to 53.5 from 52.3 in March. This reading came in better than the market expectations of 52.8. Businesses across the globe are still struggling to pull through pandemic-related hindrances. The dollar index (DXY) maintained and extended its gains after slipping below the 101.80 level during the Asian session. The DXY was last seen at the 102 levels.
The boom in the services sector pushed the Eurozone recovery up this month. The EUR was last seen flat against the USD at $1.0973 levels after recovering from a session low of $1.0938. The EUR rose by 0.5% to 88.86 against the GBP.
The GBP/USD pair dropped below 1.2400 due to a decline in UK retail sales in the month of March. This hit to UK sales was mainly a result of high inflation and bad weather which kept British consumers away from the high streets. UK Manufacturing PMI contracted to 46.6 in April, versus the expected 48.5. Chief UK economist, Paul Dales, said the survey suggested a brighter picture than the rain-affected March sales data. "That said, even though the worst of the declines in retail sales are in the past, higher interest rates will restrain spending this year,” Dale commented. The GBP was last down about 35% trading at 1.242 levels.
- EUR/CAD: 1.4764 - 1.4874 ▼
- GBP/CAD: 1.6741 - 1.6807 ▼
- AUD/CAD: 0.9038 - 0.9099 ▼
- USD/CAD: 1.3453 - 1.3559 ▲