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USD/CAD Sharply Higher; Canadian Dollar Loses Ground With Crude

Forex Aug 15, 2022 15:53
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By Ketki Saxena 

Investing.com -- The Canadian dollar weakened against its U.S. counterpart today as weak Chinese economic data and the subsequent slump in crude weighed on the loonie, while the safe-haven greenback received a boost from the renewed slowdown fears.

At 3:50 p.m in Toronto, the USD/CAD pair was at C$ 1.2905 to a greenback, up 1.03% in the day’s trading and with the day’s range of 1.2771 - 1.2934.

The safe-haven U.S. dollar was in broad demand today after the Chinese economy reported a drop in consumer spending, industrial sector and fixed asset investment activity. The data, along with the news that the Peoples Bank of China unexpectedly trimmed certain interest rates, further stoked worries of a slowdown in the world's second-largest economy, and globally. 

The data from China also weighed on crude, igniting worries of demand destruction driven by an economic slowdown, triggering a sell-off in the crude-linked loonie. 

Crude was further pressured by comments by the CEO of Aramco (TADAWUL:2222) stating the Saudi oil giant will be able to raise crude oil output to its maximum capacity of 12 million barrels per day (BPD) if requested to do so. 

Oil prices also suffered from reports that Iran and the US are close to agreeing on a new Nuclear deal that could see a reversal of Sanctions that could see Iran able to contribute around 4.0 million barrels/day to global oil supply.

Forex live notes that today’s USD/CAD rally “Puts the pair back into the middle of the range since mid-June. It's a strong rally but hasn't challenged 1.3000 and that's the key short-term level to watch.”

Looking ahead, Forex Live notes that “Tilting the balance will be oil and the Iran nuclear deal and broad risk appetite. We're awaiting word on Iran imminently while the risk mood has been surprisingly perky after a bad start on China worries.”

Economic data expected to provide further direction for the pair include tomorrow’s release of Canadian inflation figures, US Retail Sales and the Fed minutes.

USD/CAD Sharply Higher; Canadian Dollar Loses Ground With Crude
 

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