- The US Dollar appreciated more than 1% against the loonie last week, boosted by risk aversion.
- Concerns of an escalation of the Middle East conflict have offset the positive impact of higher Oil prices in the CAD.
- USD/CAD remains in a bearish trend, 6.5% below February’s highs.
The US Dollar is practically flat against its Canadian counterpart on Monday, consolidating gains after an impulsive recovery from year-to-date lows at 1.3538 last week.The Greenback appreciated more than 1% in the previous three trading days, with investors rushing for safe assets as risk aversion escalated as the US prepared this weekend’s attack on Iran.The risk-averse sentiment and the hawkish comments from Fed President Jerome Powell, following last week’s monetary policy decision, offset the positive impact of Crude oil’s rally in the Canadian Dollar.
Weak Canadian data added pressure on the CAD last week
In the macroeconomic domain, Canadian retail sales figures failed to boost enthusiasm on Friday, with a shorter-than-expected increase in May. Excluding automobiles, sales of all other products contracted against expectations for the second consecutive month.Beyond that, prices for industrial products contracted further in May, against expectations of a flat performance. All in all, figures that point to a soft economic growth in the second quarter, adding pressure on the BoC to ease interest rates further and weighing on the CAD.The longer USD/CAD trend, however, remains bearish. The Dollar has depreciated by about 6.5% from February’s highs, weighed by the softer US economic data and the negative impact of Trump’s erratic trade policy.
