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The decline in crude oil prices on Friday has sent the Canadian dollar back to recent lows. Market forecasts for the Canadian GDP missed, and economic growth is seen as flat. As the Canadian dollar declines and the US dollar rises, the USD/CANADIAN DOLLAR crosses a new weekly high.
On Friday, the Canadian dollar saw both a new high and low relative to its US counterpart. The USD/CAD pair fell to a session low of 1.3417 before rising to retake the 1.3500 level and set a new weekly high at 1.3540.
The headline statistic for Canada’s GDP printed flat at 0.0% for the month of July compared to a 0.2% decrease in June, falling short of market forecasts. The markets anticipated a meagre 0.1% increase in Canadian GDP.
Closely wound Oil prices, which had been supporting the Canadian dollar, dropped in Friday trading, relieving upward pressure on the Canadian dollar and causing the US Dollar Index to rise briefly.
The Canadian dollar also fell because of a shift in USD demand across the board and a decline in spot pricing for crude oil. The USD/CAD pair is aiming towards 1.3550 as the trading week comes to a finish. The Canadian dollar lost its oil support as WTI US crude barrels fell from $92 to under $90.
Oil has risen to $90.50, but broad-market US Dollar flows are now in charge of the chart, maintaining the USD/CAD at a high level to end the trading day on Friday.
The Manufacturing Purchasing Manager Index (PMI) data for the Canadian Dollar and the USD are scheduled to be released on Monday.
The Canadian dollar saw a whipsaw on Friday as the USD/CANADIAN DOLLAR fluctuated due to shifting market sentiment, claiming both the high and low of the trading week in a single day.
In the first half of Friday’s trading, the USD/CAD dropped 70 pip, or 0.5 percent, to 1.3220 before bouncing back to hit a new high for the week at 1.3543. Over 120 pip, or 0.90%, of the USD/CANADIAN DOLLAR price rose.
Technical indicators are breaking due to Friday’s volatility, and the Relative Strength Index (RSI) quickly transitioned from being oversold to almost being overbought.
The USD/CAD pair has retraced back to the handle around 1.3500, which is the topside of the 34-day exponential moving average, according to the daily candlesticks. Buyers will be looking to gain further ground towards the September peak near 1.3700, and put some distance between current prices and the 200-day SMA currently parked near 1.3450.
