Technical Bias: Bearish
- USDCAD falls to 1.25 region, declining around 80 pips.
- USDCAD has declined more than 300 pips since last Wednesday.
- Global crude prices remain under pressure following Saudi oil minister remarks.
The USDCAD declined sharply on Monday, as the Canadian dollar benefited from broad US dollar weakness despite falling energy prices.
The USDCAD was trading at session lows in North America, falling around 80 pips to 1.2504. The pair is down more than 300 pips since last Wednesday, around the time the US dollar began its reversal. The USDCAD is likely supported at 1.2490. Initial resistance is found at 1.2670.
The US dollar continued to backtrack o Monday, declining nearly 1 percent against a trade-weighted basket of currencies. The US dollar index fell 0.8 percent to 97.11.
In economic data, US existing home sales rose less than forecast in February, as price growth reached its fastest pace in a year. Existing home sales rose 1.2 percent to a seasonally adjusted annual rate of 4.88 million, the National Association of Realtors reported on Monday.
A dearth of Canadian data did not stop the loonie from eating away at the USDCAD. The outlook on the greenback has shifted into negative territory now that the Federal Reserve has signaled rate normalization would be slower than previously forecast.
The loonie consolidated higher despite weaker energy prices. Global benchmark Brent crude fell 0.5 percent to $55.03 a barrel. US crude (West Texas Intermediate) was little changed at $46.59 a barrel.
Crude prices declined earlier in the day after Saudi Arabia’s oil minister said the oil-rich kingdom would not reduce output amid a record US shale boom. OPEC continues to pump more than 30 million barrels per day, with output exceeding production targets for nine straight months. Saudi Arabia is producing a near-record high of 10 million barrels per day.
The oil price collapse is weighing on regional economies inside Canada. Alberta has witnessed five consecutive months of declining retail sales. The province, which is the heart of Canada’s oil and gas sector, is expected to enter a mild recession this year.