USD/CAD edges lower to near 1.3500 on subdued US Dollar, improved Crude prices

• USD/CAD loses ground due to a correction in the US Dollar.
• The improvement in Crude prices provided support for the Canadian Dollar.
• Hot US Retail Sales data might have helped the Greenback to gain ground.

USD/CAD halts its winning streak that began on January 11, trading lower around the significant level at 1.3500 during the Asian session on Thursday. The Canadian Dollar (CAD) gains ground against the US Dollar (USD) on the recovery in the Crude oil prices registered in the previous session. However, West Texas Intermediate (WTI) price trades slightly lower around $72.70 per barrel, at the time of writing.

Crude oil prices have seen an upward trajectory on Wednesday, buoyed by the positive outlook presented in the Organization of the Petroleum Exporting Countries (OPEC) monthly report. The report indicates a robust anticipation of oil demand growth for both 2024 and 2025.

In December, Canada’s Raw Material Price Index contracted for the second consecutive month, maintaining materials inflation at its most significant contractionary level since June of the previous year. The report released on Wednesday revealed a consistent contraction of 4.9%, matching the previous figure. Moreover, the Industrial Product Price (MoM) experienced a larger-than-expected reduction of 1.5%, compared to the anticipated decline of 0.7% and the prior decrease of 0.3%.

The US Dollar Index (DXY) snaps its winning streak on downbeat US Treasury yields. The DXY trades lower near 103.30 with the 2-year and 10-year yields on US bond coupons standing at 4.33% and 4.08%, respectively, by the press time.

US Retail Sales (Month-over-Month) recorded a growth of 0.6% in December, surpassing market expectations of 0.4% and the previous figure of 0.3%. The Retail Sales Control Group also showed improvement, reaching 0.8% from the previous reading of 0.5%.

Additionally, Retail Sales excluding Autos (Month-over-Month), which excludes the motor vehicles and parts sector, increased by 0.4%, exceeding the market anticipation of a steady figure at 0.2%. Traders are likely to keep an eye on US housing data scheduled for release on Thursday. On Canada’s docket, Retail Sales data will be eyed on Friday.