USD/CAD clings to gains above 1.40 post-Canadian retail sales
- USD/CAD gained some follow-through traction for the second straight session on Friday.
- A strong pickup in the USD demand remained supportive amid a sharp fall in oil prices.
- Friday’s release of Canadian monthly retail sales did little to provide any fresh impetus.
The USD/CAD pair maintained its strong bid tone through the early North American session and held steady above the key 1.40 psychological mark post-Canadian macro data.
The pair gained some follow-through traction for the second straight session on Friday and built on the previous day's goodish recovery move from the vicinity of three-week lows set on Tuesday. The momentum was supported by a combination of factors, including a goodish pickup in the US dollar demand and a sharp fall in crude oil prices.
Concerns over a further escalation in diplomatic tensions between the United States and China took its toll on the global risk sentiment. This was evident from a weaker tone surrounding the global equity markets, which forced investors to take refuge in the safe-haven US dollar.
On the other hand, a fresh leg down in crude oil prices undermined demand for the commodity-linked currency – the loonie – and remained supportive of the strong bid tone surrounding the USD/CAD pair. The Canadian dollar failed to gain any respite from Friday's release of Canadian monthly retail sales, which declined by 10% in March.
From a technical perspective, some follow-through buying above the 1.4050-60 region might be seen as a fresh trigger for bullish traders and set the stage for a further near-term appreciating move. The pair might then aim towards surpassing the 1.4090-1.4100 heavy supply zone.
Technical levels to watch