Canadian Dollar Rallies on Higher Oil Prices and Mixed CPI Data

The Canadian dollar today rallied higher against its southern neighbor driven largely by rising oil prices during the European session. The loonie extended its gains in the early American session after the release of mixed Canadian inflation data to drive the USD/CAD currency pair to new daily lows.
The USD/CAD currency pair today dropped from a high of 1.3176 to a low of 1.3114 in the American session before retracing some of its losses.
The currency pair spent most of the Asian session in a consolidative phase as markets recovered from the massive drop that occurred overnight. The pair then dropped lower in the early European session driven by higher crude oil prices as tracked by the West Texas Intermediate, which hit a high of 57.39. The pair’s drop was further accelerated by the Fed Chair Jerome Powell‘s dovish comments during his testimony yesterday. The higher oil prices were a boon to the commodity-linked loonie for the second straight session.
The loonie rallied again after the release of the Canadian CPI report for January by Statistics Canada. The CPI prints were mixed with the headline CPI print rising by 0.1% in January and the core CPI print falling to 1.4% from the previous figure of 2.0%. The pair rallied shortly afterwards and was boosted by the positive US pending home sales data by the National Association of Realtors.
The pair’s short-term performance is likely to be affected by geopolitical events and oil prices.
The USD/CAD currency pair was trading at 1.3154 as at 16:41 GMT having risen from a low of 1.3114. The CAD/JPY currency pair was trading at 84.34 having rallied from a low of 83.74.

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