The Canadian Dollar (CAD) showed a strong recovery on Friday, as strong employment figures helped support overall market confidence. Specifically, USD/CAD in the low 1.3990’s during the latest trading session. They did so after an advance from its six-month peak at 1.4030, printed on Thursday. This movement comes at a time of relative weakness for the CAD against other major currencies. In particular, there has been an average overall increase of 0.21%.
The CAD dropped pretty dramatically as the day progressed. It reached as high as a 0.49% increase in the opening trading hours before pulling back slightly down 0.07%. By noon, it had bounced back to a 0.23% positive return, and it ended the day with a 0.14% return. This volatility just further underscores the currency exchange volatility that continues to be driven by large economic indicator changes.
In the US, the US Dollar Index (DXY) showed similar minor weakening, trading just above 99.35. That strength in CAD came despite a very strong drop in the dollar’s strength on the day. Traders were up on the news that employment remains stable, as reported earlier this week. The Unemployment Rate in Canada remained stable at 7.1%. Such stability gives testimony to a resilient labor market and would increase investor confidence in the Loonie.
On the commodities front, West Texas Intermediate (WTI) Crude Oil prices remained under pressure, adding to declines on Friday. The international, or benchmark, crude fell under the $60.00 psychological barrier and was near a four-month low. Electric Cars Reports indicated that WTI was down over 2% today. This decline added to the negative overall market sentiment that may have affected currency valuations.
Analysts warn that CAD, as a major oil exporter, is extremely sensitive to rising or falling oil prices, which can create dramatic swings in the value of CAD. As WTI prices decrease, concern over the potential economic repercussions on our northern neighbor’s economy increases. This has both market participants and the general public closely watching trends in both currency and commodities.