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Canadian Dollar Joins Other Commodity Currencies in Rally, Ignores Negative Fundamentals

February 19, 2021 at 18:36 by Vladimir Vyun

Canadian coins on Canadian dollar billsCommodity currencies were clear winners today, and the Canadian dollar was among them. While the loonie failed to beat its commodity-linked counterparts, like the Australian and New Zealand dollars, it managed to gain on other most-traded currencies. That is despite seemingly adverse fundamentals.

Statistics Canada reported that retail sales dropped by 3.4% in December on a seasonally adjusted basis, demonstrating the biggest drop since April when prices sank due to the COVID-19 pandemic. Core retail sales (those that exclude important but volatile automobile sales) adjusted for seasonal variations sank by 4.1%. Analysts had predicted ahead of the report that both indicators would decline by approximately 2.5%.

Another negative factor for the Canadian dollar was the decline of prices for crude oil — Canada’s biggest export. Oil prices fell as the weather in the United States improved and temperatures rose from extremely low levels, resulting in a resumption of oil production in Texas — the biggest oil-producing region in the USA and the one that was hit hardest by the extreme cold. But earlier this week prices had rallied to the highest level in more than a year, and despite the decline, crude has still been trading near the highest levels in more than a year.

USD/CAD dropped from 1.2676 to 1.2628 as of 18:34 GMT today. EUR/CAD fell from 1.5323 to 1.5289, retreating from the daily maximum of 1.5379. Meanwhile, AUD/CAD soared from 0.9842 to 0.9924, trading at the highest level since June 2018.

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

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