Canadian Dollar Gains Modestly Amid Broad USD Weakness

Canadian Dollar Gains Modestly Against Weaker USD but Trails Other Majors

The Canadian Dollar (CAD) is showing modest strength during Thursday's session, taking advantage of broad-based US Dollar (USD) weakness. Despite the uptick, the loonie continues to underperform its G10 peers, reflecting tempered momentum.

CAD Supported by USD Decline

The US Dollar has slipped significantly this week due to dovish Federal Reserve sentiment and soft economic data, which has created room for modest appreciation in commodity-sensitive currencies like the CAD.

"CAD is marginally higher today as the greenback faces selling pressure, but the currency remains less responsive compared to other majors like the EUR and GBP," analysts observed.

CAD Underperformance May Reflect Oil Volatility

A potential explanation for the lagging CAD performance could be recent volatility in oil prices, a key driver of Canada’s terms of trade and economic outlook.

“WTI crude remains range-bound, which could be limiting further CAD upside despite the weak USD narrative,” one FX strategist noted.

CAD Outlook:

• Short-term support: 1.3630 (USD/CAD)
• Resistance: 1.3730
• Key driver to watch: Upcoming Canadian GDP data and global oil prices

Related on Tredu:

• USD Weakness Deepens: What’s Next for the Dollar?
• Oil Market and the CAD: Where’s the Correlation?
• Bank of Canada Rate Path: Hawkish or Cautious?

Conclusion: While the CAD benefits from USD softness, its underperformance compared to other majors highlights investor caution and dependency on commodity sentiment. Traders will be watching Canadian economic data closely for the next leg of direction.

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