USD/CAD Slips Below 1.2650 as Oil Jumps More Than 5%
- USD/CAD drops 1.4% on Monday as oil prices surge on renewed demand
- US dollar declines across the board to start the week
USD/CAD Slips Below 1.2650
The Canadian dollar has rallied against its US counterpart for two days straight. Extending its Friday decline into Monday’s session, the USD/CAD has slipped below 1.2650, just two days after it regained that level.
The USD/CAD on Monday lost roughly 1.4%, or nearly 180 pips, as the sharp swing to the upside in the prices of oil lifted the value of the Canadian dollar, often described as a commodity currency, or even petrocurrency. The Canadian dollar would often move in tight correlation to the prices of oil mainly due to the fact that Canada is the largest source country of crude oil imports to the United States.
As the price of crude oil on Monday spiked more than 5%, the USD/CAD pair entered deeply into negative territory, following Friday’s whipsaw trading. On Friday, the exchange rate climbed to a December-high of 1.2948 but upside momentum faded quickly and the pair reversed course, closing lower by over 1% from its session high.
Over the past two trading days, the USD/CAD pair has slipped from a Friday peak of 1.2948 to a Monday low of 1.2648, a drop of 2.3%, or 300 pips.
Prior to the previous two days of losses, the pair climbed for four days straight amid increased US dollar strength. Tuesday’s performance in the USD/CAD pair continues to be weak as the exchange rate slipped to a session low of 1.2610.
USD Lower Across the Board
At the start of the weekly trading, the US dollar is losing its resiliency across the board. On Monday, the EUR/USD pair climbed more than 50 pips or nearly half a percent. The GBP/USD moved higher by over 115 pips or almost 0.90%.
Later in the week, several key events could influence the movements in currencies. The US jobless claims slated for release on Thursday would signal whether the labor market continues to heal despite a recent rise in Covid-19 cases and hospitalizations.
The Commerce Department will reveal a crucial consumer spending and inflation report for July on Friday. In addition, Federal Reserve Chairman Jerome Powell will speak on the economic outlook at the central bank’s annual Jackson Hole economic symposium.
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