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Canadian Dollar Falls Against US Dollar on Weak Oil Prices, COVID-19 Fears

February 16, 2021 at 18:51 by Simon Mugo

An assortment of CAD billsToday, the Canadian dollar fell against its US competitor driven by the falling crude oil prices and the rising US Treasury yields that boosted the greenback. The USD/CAD currency pair recouped most of yesterday’s losses as buyers stepped in defending the crucial 1.2600 level and pushing the pair higher.
The USD/CAD currency pair initially fell to a low of 1.2609 in the Asian market before rallying to a high of 1.2702 in the American session but was slightly off these highs at the time of writing.

The currency pair’s initial decline was fueled by the rising crude oil prices as tracked by the West Texas Intermediate before the trend reversed. The loonie’s weakness was underpinned by fears that the spread of new COVID-19 variants would plunge Canada into a severe third wave of infections. Each of Canada’s 10 provinces has reported at least one case of the UK variant. News that India’s Serum Institute would start shipping AstraZeneca’s vaccine to Canada had a minimal impact on the loonie. The release of Canada’s international transactions in securities data by Statistics Canada also had a muted impact on the pair.

The surge in US Treasury yields in the early American session pushed the pair higher as the US Dollar Index rallied to a high of 90.64. The lack of major releases from the two countries dockets left the pair susceptible to investor sentiment and geopolitical events.

The currency pair’s future performance will likely be affected by tomorrow’s Canadian inflation data and US retail sales report.

The USD/CAD currency pair was trading at 1.2681 as at 18:50 GMT rising from a low of 1.2609. The CAD/JPY currency pair was trading at 83.48 after falling from a high of 83.75.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.