- The Canadian dollar gives ground and the USD rebounds after good retail sales data.
- Investor concerns about the possibility of an escalation of the conflict in the Middle East provide additional support to the safe-haven US dollar.
- Oil prices have depreciated almost 3.5% from the highs reached in early April, adding negative pressure to the CAD.
The attempt to recover Canadian dollar (CAD) observed during the European session on Monday has been short-lived. The US dollar has resumed its upward trend, as better-than-expected retail consumption data has confirmed the strong momentum of the US economy.
The retail sales figures were released after last week's persistent inflation, reinforcing the view that the Federal Reserve (Fed) will keep interest rates higher for longer. This is supporting the US Dollar, which is further supported by the volatile situation in the Middle East. Israel is considering retaliating against Iran, which could trigger a regional conflict, which ultimately increases demand for dollars on the back of its safe haven status.
In Canada, February manufacturing sales data improved, as expected, although wholesale sales stagnated. Additionally, oil prices, Canada's main export, are retreating from last week's highs, adding pressure to the Canadian dollar.
Daily Market Movement Summary: USD/CAD maintains bullish tone thanks to good US data and risk aversion
- The Canadian dollar retreats on encouraging consumer data. The daily chart is practically flat.
- US retail sales rose 0.7% in March from 0.9% in February, well above the 0.3% increase expected by the market.
- Excluding autos, total retail and food store sales are up 1.1%, their best reading since January 2023. The market was expecting a 0.4% advance.
- New York Fed President John Williams has acknowledged the importance of recent inflation levels, but has said he expects rate cuts to occur this year.
- Canada's manufacturing sales rose 0.7% in February from 0% the previous month, in line with market forecasts.
- Canadian wholesale sales, however, stagnated in February versus market expectations of a 0.8% increase.
- WTI oil prices have retreated to two-week lows in the mid-$84 zone, below the high of $87.60 reached in previous weeks.
Price of the Canadian Dollar today
The following table shows the percentage change of the Canadian Dollar (CAD) against the main currencies listed today. The Canadian dollar was the weakest currency against the British pound.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.08% | 0.00% | -0.03% | 0.18% | 0.66% | 0.38% | 0.00% | |
| EUR | -0.07% | -0.08% | -0.10% | 0.10% | 0.58% | 0.30% | -0.07% | |
| GBP | -0.01% | 0.08% | -0.03% | 0.17% | 0.66% | 0.37% | 0.01% | |
| CAD | 0.03% | 0.11% | 0.02% | 0.20% | 0.68% | 0.40% | 0.02% | |
| AUD | -0.18% | -0.11% | -0.19% | -0.21% | 0.47% | 0.19% | -0.18% | |
| JPY | -0.65% | -0.57% | -0.63% | -0.68% | -0.47% | -0.25% | -0.65% | |
| NZD | -0.38% | -0.31% | -0.39% | -0.40% | -0.21% | 0.28% | -0.37% | |
| CHF | 0.00% | 0.07% | -0.01% | -0.04% | 0.16% | 0.65% | 0.37% |
The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen in the left column, while the quote currency is chosen in the top row. For example, if you choose the Euro in the left column and scroll down the horizontal line to the Japanese Yen, the percentage change that appears in the box will represent EUR (base)/JPY (quote).
Technical Analysis: USD/CAD remains bullish, with downside attempts limited above 1.3700
The US Dollar keeps the bullish bias intact, with the Canadian Dollar's recovery attempt limited above previous highs in the 1.3700 area so far.
The pair last week broke the top of last month's trading channel and is now testing the resistance zone at 1.3780. The USD/CAD pair is at overbought levels but not extremes, with the channel's measured target broken at the mid-November high at 1.3845. On the downside, supports are at 1.3680-1.3660 and below at 1.3545.
USD/CAD Daily Chart
Risk Sentiment FAQ
What do the terms “risk-on” and “risk-off” mean when referring to sentiment in financial markets?
In the world of financial jargon, the two terms “risk appetite (risk-on)” and “risk aversion (risk-off)” refer to the level of risk that investors are willing to bear during the investment period. reference. In a “risk-on” market, investors are optimistic about the future and are more willing to buy risky assets. In a “risk-off” market, investors begin to “play it safe” because they are worried. for the future and, therefore, buy less risky assets that are more certain to provide a return, even if it is relatively modest.
What are the key assets to follow to understand risk sentiment dynamics?
Typically, during periods of “risk appetite”, stock markets rise, and most commodities – except gold – also appreciate as they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials strengthen due to increased demand, and cryptocurrencies rise. In a “risk-off” market, Bonds – especially major government bonds – rise, Gold shines and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar benefit.
Which currencies strengthen when sentiment is “risk-on”?
The Australian Dollar (AUD), Canadian Dollar (CAD), New Zealand Dollar (NZD) and minor currencies such as the Ruble (RUB) and the South African Rand (ZAR) tend to rise in markets where there is “appetite for risk.” This is because the economies of these currencies rely heavily on commodity exports for their growth, and these tend to rise in price during periods of “risk appetite.” This is because investors anticipate higher demand for raw materials in the future due to increased economic activity.
Which currencies strengthen when sentiment is “risk averse”?
The major currencies that tend to rise during periods of “risk aversion” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The Dollar, because it is the world's reserve currency and because in times of crisis investors buy US public debt, which is considered safe because it is unlikely that the world's largest economy will go into default. The Yen, due to the increase in demand for Japanese government bonds, since a large proportion is in the hands of domestic investors who are unlikely to get rid of them, even in a crisis. The Swiss franc, because strict Swiss banking legislation offers investors greater capital protection.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
