Canadian Dollar rebounds on Friday, catches a ride on Crude Oil

• Canadian Dollar softly up on Friday as Crude Oil rises.
• Canada Retail Sales decline more than expected, hampers topside.
• Loonie up overall on the week but still down against the US Dollar.

The Canadian Dollar (CAD) rose on Friday, bolstered by a late-week climb in Crude Oil bids as CAD traders shrugged off headwinds for the time being.

Canada saw Retail Sales decline at a faster pace than expected in November, and the Bank of Canada (BoC) was added to the growing list of global central banks that are expected to deliver rate cuts at a slower and shallower pace than investors initially hoped for.

Daily digest market movers: Canadian Dollar sheds overhang in headlines to rebound on Friday

• Canadian Retail Sales declined 0.2% in November, missing the forecast hold at 0.0% and declining further from October’s 0.7%.
• Core Retail Sales accelerated declines, printing at -0.5% versus the anticipated -0.1% and the previous 0.4% (revised down from 0.6%).
• Canada Employment Insurance Beneficiaries Change rose to 1.7% in November versus the previous 0.7%.
• US Consumer Inflation Expectations declined in January from 2.9% to 2.8%, according to the University of Michigan’s (UoM) consumer survey.
• UoM’s Consumer Sentiment Index also improved in January, rising from 69.7 to 78.8 compared to the forecast 70.0.
• US Existing Home Sales declined 1% in December, swallowing November’s 0.8% uptick.
• According to surveyed economists, the Bank of Canada is expected to start cutting interest rates much later than previously anticipated, with the majority seeing no rate changes until June at the earliest.
• Overall rate cuts are expected to be much shallower than investors initially hoped.
• Bottomless Crude Oil demand from US refineries as well as a cold snap trimming production rates see US reserves declining, bumping Crude Oil bids heading into the weekend.

Technical Analysis: Canadian Dollar climbs across the board on Friday, USD/CAD sheds 1.3500

The Canadian Dollar (CAD) is in the green against all of its major currency peers on Friday, gaining around four-tenths of a percent against the Pound Sterling (GBP) and the New Zealand Kiwi (NZD), with the smallest gains of around a tenth of a percent against the Euro (EUR) and the Australian Dollar (AUD).

The US Dollar is down about a fifth of a percent against the Canadian Dollar on Friday after an intraday rejection from the 1.3500 level before testing into the 1.3450 region. Near-term momentum is seeing the USD/CAD drift back toward the 200-day Simple Moving Average (SMA) near 1.3430.

Daily candlesticks are getting hung up on the 200-day SMA just below the 1.3500 level, and the USD/CAD could see a technical rejection extend into a bearish pullback with a price floor chalked in near 1.3200.

Even if buyers find the topside momentum necessary to carry the USD/CAD over the consolidation of the 50-day and 200-day SMAs near 1.3500, there’s still a lot of ground to cover before bids can recover the last swing high set in early November near 1.3900.

USD/CAD Hourly Chart

USD/CAD Daily Chart