Canadian Dollar Ends Higher as U.S. Dollar Retreats Broadly
March 20, 2015
By Don Curren
TORONTO–The Canadian dollar ended substantially higher Friday, bouncing back from earlier weakness as the U.S. dollar tumbled across most major currencies and
investors sought out more risk-sensitive assets.
The U.S. dollar was most recently at C$1.2584 from C$1.2717 late Thursday, according to data provider CQG.
The greenback hit a session high at C$1.2725 in the aftermath of Canadian domestic retail sales data, but began a sharp descent against its Canadian counterpart as oil prices rallied and the greenback retreated broadly.
“It’s a very optimistic day across financial markets, so we’re seeing a good bout of strength in equities,” said Scott Smith, senior market analyst with Cambridge Mercantile Group.
“That’s flowing through to oil, and overall putting downward pressure on the U.S. dollar,” he said.
The result was a Canadian dollar that reflected broader global market themes rather than domestic factors.
“It’s more of U.S. dollar story than a Loonie story,” said Mr. Smith.
The Canadian dollar did suffer a spate of weakness after news that retail sales in January fell short of expectations, dropping by 1.7% against an expected 0.8% decline. But it was swept higher by the broad move out of the U.S. dollar in midmorning trading.
The divergence of the U.S. Federal Reserve, which is on a path to higher interest rates, and the Bank of Canada, which is much more dovishly positioned, will keep trading in the U.S./Canadian dollar pair volatile, Mr. Smith said.
“What that’s going to do is create a lot of volatility” for the U.S./Canadian dollar pair, he said.
“I don’t think the road will be straight up for the U.S. dollar. We’re going to get a lot of days like we’ve had over the past week where we get these 100 or 200 point swings,” he said.
Read the full article here: http://www.wsj.com/articles/BT-CO-20150320-709452