On Friday, the Loonie touched an eight-month high, following a week-long rise of 2.4 percent. Concerns of global economic development stalling due to the Delta variant and growing international political pressures prompted a run to the US dollar as a haven.
The week’s 8.8% drop in the price of a barrel of West Texas Intermediate (WTI) was especially indicting for the Canadian economy, the world’s fourth-largest oil exporter. WTI has fallen 17.2 percent since hitting a high of $74.68 on July 5.
The US Dollar benefited on expectations that the Fed is moving closer to announcing a drop in its $120 billion per month bond purchases, but this is far from definite.
The outlook for the USD has improved dramatically over the previous two weeks, and the underlying reasons are unlikely to alter soon.
While the Delta version is not causing widespread lockdowns, it can significantly influence global economic development. The US dollar is the primary haven for assets in times of market stress, as it usually has been.
Overall, the weekly forecast for USDCAD is bullish despite Friday’s corrective move of more than 100 pips. The US dollar remains broadly strong. Due to foreign political events at play and worries about slowing economic development, the USDCAD soared to an eight-month high on Friday, marking a 2.4 percent gain for the week.
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