The Canadian Dollar (CAD) traded marginally higher against its major currency peers during the Asian session on Friday, following a sharp decline on Thursday that was attributed to weakness in oil prices [1]. The USD/CAD pair moved down to near 1.3735, attempting to regain ground but remaining close to its over two-week high of 1.3748 [1]. According to the currency heat map, CAD was strongest against the Japanese Yen, showing a 0.34% gain, while its performance against the US Dollar was a modest 0.07% increase [1].
The recent volatility in the Canadian Dollar was influenced by a significant retracement in WTI oil prices, which fell to around $92.50 after failing to break above $100 [1]. This decline was linked to geopolitical developments, including US President Donald Trump advising Israeli Prime Minister Benjamin Netanyahu not to repeat attacks on Iranian energy infrastructure, and clarifying he was unaware of planned attacks on the South Pars gas field [1]. Additionally, indications that European nations and Japan are prepared to help unblock energy product passage through the Strait of Hormuz further pressured oil prices [1].
Earlier in the week, the Bank of Canada (BoC) announced its monetary policy decision, leaving interest rates unchanged at 2.25%, which contributed to heightened volatility in the CAD [1]. Looking ahead, investors are focused on Canadian Retail Sales data for January, scheduled for release at 12:30 GMT. The Month-on-Month Retail Sales are estimated to have grown by 1.5% after a 0.4% decline in December [1].
Meanwhile, the US Dollar (USD) showed slight gains after a sharp sell-off on Thursday, adding another layer of complexity to the CAD's performance in the currency markets [1].
CONCLUSION
The Canadian Dollar has shown a modest recovery following a sharp drop driven by oil price weakness and geopolitical tensions. Market participants are now awaiting Canadian Retail Sales data, which is expected to show a rebound. The overall sentiment remains cautious, with medium market impact as traders monitor both oil prices and upcoming economic releases.