USDCAD: Canadian Dollar Under Pressure On Commodity Prices – Reduced Financial flows
- Recent data from Canada revealed that Dec Retail Sales were lower than expected, at -2.1% versus the anticipated -0.3% level and Jan CPI dropped to +0.5% from the prior +0.8% reading in Dec.
- The increasing discount of Western Canadian oil (WCS), versus global benchmark West Texas Intermediate (WTI) has also weighed on the CAD, as has the decrease in so called “safe haven” flows into the Canadian dollar.
- The USDCAD pair has pushed above the 1.02 handle on the back of this negative data and the broad USD strength scenario, hitting a high of 1.0301 today.
- The move to a new high did meet with selling pressure and the “Loonie” has subsequently given back earlier gains, now trading around the daily open at 1.0256.
- The greenback gained versus major currency counterparts amid ongoing uncertainty around how long the Fed intends on continuing to purchase the $85bn per month in bonds in order to stimulate the US economy.
- Fed chair Bernanke, has advised that the monetary easing benefits still outweigh the cost.
- From a technical perspective, the D1 RSI is in overbought territory but has not yet showed any signs of topping out.