USD/CAD Bounces Off 3-Year Low, Still Pressured by Sellers
- USD/CAD trades near a three-year low around 1.2470
- Economic news ahead could narrate the pair’s moves
USD/CAD Bounces Off 3-Year Low
The USD/CAD pair made a new low on Monday as sellers pushed the exchange rate to a three-year low at 1.2450. The last time the price reached this level was on February 16, 2018. USD/CAD has been trading to the downside ever since the pandemic turbulence shot it as high as 1.4670 on March 18. In the span of one year, the pair has depreciated by 15% to the current market price. Even though the pair is now off its multi-year low, market participants continue to subdue the exchange rate below 1.2500, currently at 1.2475.
On Monday, USD/CAD registered a five-day streak of trading into negative territory. If the pair picks up some buying momentum and closes above the opening price of 1.2470, it will paint the first positive trading session since Mar 8.
The Link Between the Loonie and Oil
Despite a broad US dollar strength across the currency market, the USD/CAD pair remains in a bearish market and the selling momentum has kept dragging the pair to the downside. The appreciation of the Canadian dollar is underpinned by bullish sentiment towards crude oil. The Canadian dollar, also called the loonie, tends to run according to oil prices as Canada is the largest foreign supplier of crude oil to the US. About 95% of Canada’s oil exports go to the US, which makes up roughly 40% of the total US oil imports. Usually, when oil prices go up, the value of the loonie also goes up and the USD/CAD depreciates.
On the economic front, USD/CAD traders will monitor upcoming news and events that have the potential to direct the pair’s behavior and create heightened volatility in the short term. First on the agenda is the Cope CPI report of Canada on Wednesday at 08.30 am ET. Later on, the same day is the US Fed meeting, where the focus will be on the US dollar. And on Friday, the Canadian core retail sales data will arrive at 08.30 am ET.
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