USD/CAD recovers above 1.34 as crude oil selloff picks up steam
- CAD gathers strength on upbeat retail sales data on Wednesday.
- Crude oil falls sharply after EIA reports large build in inventories.
- Coming up: FOMC May meeting minutes.
After spending a large portion of the day in a relatively tight range near the 1.34 mark, the USD/CAD pair turned south after today's data from Canada provided a boost to the CAD. However, following the dip to 1.3350 area, the pair gained traction and rose to a daily high of 1.3420 as the commodity-sensitive loonie failed to preserve its strength amid the sharp drop witnessed in crude oil prices. As of writing, the pair was up 0.1% on the day at 1.3418.
Earlier today, Statistics Canada reported that retail sales (excluding autos) increased by an impressive 1.7% on a monthly basis in March to beat the market expectation of 0.9%, which allowed the CAD to outperform its rivals.
In its weekly report, the U.S. Energy Information Administration said that commercial crude oil inventories rose by 4.7 million barrels compared to experts' forecast for a draw of 0.6 million barrels and weighed on crude oil prices. The barrel of West Texas Intermediate was last seen trading at $61.30, losing 2.6% on a daily basis.
In the meantime, the US Dollar Index is posting modest daily gains above the 98 handle while waiting for the FOMC to publish the minutes of its May meeting. "As the Fed has clearly communicated that it expects to be on hold for some time, focus will likely be mainly on the reasoning behind the surprise cut in the Interest on Excess Reserves (IOER),” Danske Bank analysts said previewing this event.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
