Home Forex News USD/CAD Remains Bearish As Oil Prices Spike to 3-Month Highs

USD/CAD Remains Bearish As Oil Prices Spike to 3-Month Highs

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  • Oil Prices Spike Impact
  • Canadian Retail Sales Drop
  • CAD Strength

The Canadian Dollar remains fractionally stronger against the U.S dollar, seen as one of the reasons why the USD/CAD pair is edging lower at the start of the week. The pair continues to trade with a mild negative bias as the Canadian Dollar continues to strengthen across the board.

USD/CAD Bearish Bias

The CAD strength can be attributed to a rally in oil prices in recent days. Weakness in the U.S dollar with the opening of the global economies following COVID-19 has also continued to fuel the bearish sentiment around the USD/CAD pair.

Oil prices have rallied to three-month tops in recent days finding support above the $40 a barrel level. The Commodity-linked CAD should continue to benefit from a spike in oil prices going forward. However, a resurgent dollar as a safe-haven in the wave of talk of a second wave of coronavirus infection should curtail the CAD gains against the Dollar.

The Canadian Dollar has remained resilient against the Dollar even on Retail Sales falling short of expectations in April. Retail sales were down by just over a quarter, 26.4%, to $34.7 billion. Retail sales have dropped by close to 33% since Canada started implementing physical distancing measures in Mid-March.

USD/CAD Outlook

The Dollar inched higher, Monday morning, touching three weeks highs against the basket of other major currencies. A strengthened greenback should avert a further slide in the USD/CAD pair that has been on the receiving end due to a strengthened Canadian dollar.

It promises to be a busy week for the USD/CAD pair with a plethora of economic releases and policymaker speeches poised to influence trader’s sentiments on the two currencies. Later in the day, the focus should be on the release of the Existing Homes sales as well as the Chicago Fed National Activity Index.

A speech by the Bank of Canada Governor Macklem should sway traders’ sentiments on the CAD conversely influence USD/CAD price action.

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