The Canadian Dollar (CAD) is trading slightly higher against major currencies during Friday’s Asian session, recovering modestly after Thursday’s sharp decline. The USD/CAD pair has slipped to around 1.3735, attempting to pull back from recent highs, though it remains close to its two-week peak of 1.3748.
The earlier weakness in the CAD was largely driven by a drop in oil prices. WTI crude has fallen back toward $92.50 after failing to sustain levels above $100. The decline comes after US President Donald Trump urged Israeli Prime Minister Benjamin Netanyahu to avoid further attacks on Iranian energy infrastructure, according to Reuters. Trump also noted he was unaware of Israel’s plans to strike Iran’s South Pars gas field, the world’s largest gas reserve.
Adding to the pressure on oil prices, European countries and Japan have signaled readiness to support efforts to keep energy shipments flowing through the Strait of Hormuz, easing supply concerns.
Throughout the week, the Canadian Dollar has remained volatile, particularly following the Bank of Canada’s (BoC) monetary policy decision on Wednesday. The central bank kept interest rates unchanged at 2.25%, as expected, but the cautious tone added to currency fluctuations.
Market participants are now turning their attention to Canada’s Retail Sales data for January, scheduled for release at 12:30 GMT. Retail Sales are expected to rise by 1.5% month-on-month, rebounding from a 0.4% decline recorded in December.
Meanwhile, the US Dollar (USD) is seeing a mild recovery after Thursday’s sharp sell-off. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is up about 0.2% near 99.35. On Thursday, the index dropped more than 1% to around 99.00.
The recent pressure on the US Dollar followed hawkish signals from major central banks, including the Bank of Japan (BoJ), Bank of England (BoE), and European Central Bank (ECB). Their firm stance on interest rates reduced concerns about policy divergence with the Federal Reserve (Fed), weighing on the USD.
