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USDCAD Rallies as US Dollar Rises, Falls on Consumer Sentiment

Simon Mugo trader
Updated 17 Mar 2023

The USDCAD currency pair was trading up over 38 pips as the US dollar gained against its Canadian competitor during the early American session. However, the greenback was similar to the loonie, given the minimal gains made by the pair.


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The Canadian dollar’s weakness was accelerated by the drop in global crude oil prices, as tracked by the West Texas Intermediate, which was down slightly on the day following yesterday’s sideways price action.

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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY

The markets had an uneasy calm as First Republic Bank was rescued by the biggest US banks, including JP Morgan, Bank of America, Citigroup, Wells Fargo and Truist, who gave it a $30 billion credit line to meet its liquidity obligations, including facilitating customer withdrawals. 

However, some analysts have pointed out that US banks increased their borrowing through the Fed’s discount window, where they borrowed a massive $152.85 billion in the week ended March 15, 2023. For now, the bank run on First Republic Bank has been quelled, but is this the last we will see of the current crisis?

On the other hand, the release of a report on Canadians’ foreign securities purchases indicated that the country’s investors sold foreign securities worth C$4.21 billion in January, preferring to park their cash in banks instead of in the stock market.  

Furthermore, Canada’s PPI data fell 0.8% in February, according to the final report, with the annualised print coming in at 1.4% as overall inflation fell. Still, the loonie’s performance did not improve after the raw materials prices fell 0.4%, translating to an annualised decline of 5.2%. 

The release of the US industrial production data for February, which showed no change, could not derail the US dollar’s rally as demand for the safe-haven greenback remained high. Investors now predict the Federal Reserve will hike rates by 0.25% at next week’s meeting.  

The currency pair later pulled back after the release of disappointing US University of Michigan consumer sentiment data just before publishing.

*This is not investment advice. 

The USDCAD price chart.

The USDCAD currency pair was trading up 38.5 pips (0.28%) as the US dollar rallied against its Canadian peer.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading