Technical Bias: Slightly Bullish
- USDCAD eases off recent lows, climbing to its highest level since April 16.
- Canada wholesale sales declined unexpectedly in February, falling 0.4% vs. expectations for 0%.
- Crude oil prices declined slightly on Tuesday.
The USDCAD rallied on Tuesday to its highest level in five days, as disappointing Canadian wholesale sales and retreating oil prices weakened demand for the loonie.
The USDCAD touched a daily high of 1.2296. It would subsequently consolidate at 1.2287, up 0.5 percent. That was the pair’s highest level since April 16. The 1-hour trend line maintains a bullish bias for the USDCAD, which is trading above its 100-day SMA (1.2250). The pair successfully toppled the 1.2264 resistance and is targeting 1.2303. On the downside, support is likely found at 1.2182.
The USDCAD plunged around 500 pips last week, as weak US data and a status quo Bank of Canada supported the loonie.
The US dollar index turned negative on Tuesday, falling to a low of 97.64. It would later settle at 97.88, down 0.1 percent.
In economic data, Canada’s wholesale sales declined unexpectedly in February, adding further evidence of a dismal first quarter. Canadian wholesales declined 0.4 percent in February after dropping 2.9 percent in January, Statistics Canada reported on Tuesday. A median estimate of economists called for no change for February.
Canada’s economy is forecast to slow considerably in the first quarter, stemming from plunging oil prices. The price of Brent crude rallied nearly 10 percent last week and continued to advance on Monday. Oil prices weakened on Tuesday, with Brent crude for June delivery falling 1.3 percent or 83 cents to $62.62 a barrel as of 13:18 ET. West Texas Intermediate (WTI) for May delivery was down 0.71 percent of 40 cents to $55.98 a barrel at 13:10 ET.