The increase in the rate of USD on Friday resulted in a 0.28 percent fall in the rate of CAD on July 19. The comments of NY Fed President John Williams about the need for proactive monetary policy from Central Bank put pressure on USD, which resulted in an increase in CAD rate on Thursday. The anticipation of a deeper rate cut by Central Bank has resulted in a sharp rise in the rate of Canadian Dollar. A clarification from NY FED on Friday about the academic nature of the comments, lifted the pressure and caused a rebound in the prices of the US dollar.
However, this seems to be a bad news for Canadian dollar as it put a downward pressure on the currency. Coupled with the news of falling retail sales in Canada, the fall was huge. The recent bad weather in the country is blamed for the underperformance of retail sales, which were projected to rise by 0.3%. The fall in demand for food and alcohol has resulted in a -0.1% decline in retail sales. A 0.2% fall in the consumer prices is also reported.
The chances of a deeper rate cut have gone down with the clarification given about John Williams’s comments. The USD will have a mixed finish to the week against the major currency pairs. Majority of the safe haven currencies and commodities will be ahead of the US Dollar by the end of this week. But some European currencies and the Canadian Loonie are projected to be under pressure against the USD. Though the rates are seeing a sharp decline, experts at Knightsbridge FX believe that there is still sometime to declare the bottom for USD/CAD trade. The bottom for USD/CAD can be declared when the trade closes above 1.31.
According to Knightsbridge FX, USD/CAD rate is all set to see the bottom soon. The fall in retail sales, rise in the USD and the decrease in oil prices for 6 out of 7 trading days are causing a downward pressure on the Canadian Dollar. It is recommended to sell the Canadian dollars at the crosses in order to get the best rates. The currency exchange is bearish on CAD/JPY and EUR/CAD as well.