The Canadian Dollar was lifted by commodity rallies before a crucial Greek government confidence vote whose outcome will determine if the nation will be able to avoid defaulting on its debt.
As the loonie is a commodity linked currency, it was boosted to its highest levels in a week against the greenback. Crude oil is Canada’s major export and has risen sharply in the past two days.
“All the trends are in place, with stronger oil prices and stronger equity markets,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto. “The euro is up to new highs, and the U.S. dollar is broadly weaker. All of that is helping the Canadian dollar’s position, creating some Canadian dollar strength.”
The Canadian dollar remained higher even after a government report showed retail sales increased in April less than economists forecast.
Statistics Canada announced that April retail sales rose 0.3 percent to a seasonally adjusted CAD37.4 billion (USD38.3 billion) after a revised decline of 0.1 percent in March. Expectations were for a 0.4 percent increase.
“Despite having this decline off of expectations, I don’t see it as having a major impact,” said C.J. Gavsie, managing director for foreign-exchange trading at Bank of Montreal’s BMO Capital Markets unit in Toronto. “It’s the bigger-picture story on Greece today that’s holding dollar-Canada in check.”
The Canadian dollar appreciated against the greenback today, with USDCAD reaching lows of 0.9711 by 15:30GMT dropping over 90 pips from today’s Asian session high of 0.9804.