- The dollar falls to six-week lows at 1.3255.
- CAD extends gains on rising oil prices and risk appetite.
- US consumer sentiment deteriorated more than expected in November.
The USD has extended its losses against its Canadian counterpart on Friday, hitting a fresh six-week low at 1.3255. The pair remains on the defensive after depreciating almost 2% in the last two days, with limited upside attempts below 1.3300 so far.
Canadian dollar rises on risk appetite and rising oil prices
Oil prices appreciated almost 3% on Friday, with US benchmark WTI oil struggling to break back above the $88.00 mark, after bouncing off $84.00 on Thursday. This has underpinned the advance of the Loonie, as Canada is one of the world’s leading crude oil producers.
Softer-than-expected US inflation data on Thursday, with annual CPI slowing to 7.7% in October from 8.2% in September, weighed on the dollar broadly. These figures have added to evidence that price pressures are starting to ease, leading investors to anticipate a shift from the Federal Reserve to a slower rate hike.
Inflation data in the US has boosted risk appetite, sending US Treasuries and the dollar higher. The dollar index, which measures the value of the dollar against a basket of currencies, has slumped 3.3% in the past two days, hitting levels below 107.00 for the first time since mid-August.
In a very scarce macroeconomic calendar, with the celebration of Veterans Day in the US, the preliminary Michigan Consumer Sentiment index has deteriorated more than expected, weighed down by concerns about inflation and rising rates of interest.
Technical levels to watch
Source: Fx Street
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