How does Canada’s dollar react to oil prices?

The Canadian dollar strengthened against American currency on Thursday. The CAD was able to recover from a nearly two-week low, but the move was limited as global equity markets lost ground and domestic data showed wholesale trade in November rose less than expected.

Canadian wholesale trade increased by 0.5% in November from October on higher sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada said. Analysts had forecast an increase of 1.9%.

The USD/CAD pair is eating into the bullish rally’s tracks from yesterday’s business with 1.3450/30 eyed as a potential support structure. The pair is trading at 1.3464 at the time of typing.

WTI crude prices rose 0.7% to $80.02 a barrel, while the Canadian dollar was trading 0.3% higher at 1.3455 to the greenback, or 74.32 U.S. cents, after touching its weakest intraday level since Jan. 6 at 1.3520.

Separate domestic data showed that home prices fell 1.1% in December from the previous month, extending their decline from a peak in May.

Home prices have declined in the face of the Bank of Canada’s aggressive interest rate hikes to address inflation. The Canadian central bank lifted its benchmark rate in December to a 15-year high of 4.25%.

Money markets expect 60% chance that BoC could raise the policy rate by a quarter of a percentage point next Wednesday, and expect that rate to peak at 4.50%.