The Canadian dollar weakened against its major rivals on Wednesday morning in New York as crude oil, Canada’s largest export, fell to its lowest level in more than 5-weeks amid demand concerns.
Light Sweet Crude Oil (WTI) futures for September delivery were down $1.77 to $92.02 a barrel. Yesterday, oil ended at a five-week low below $94 after a batch of lackluster economic reports signaled a faltering U.S. economy.
Tuesday after the market hours, data from the API revealed U.S. crude oil inventories unexpectedly declined 3.31 million barrels, while gasoline stocks rose 2.55 million barrels in the week ended July 29. Analysts were expecting crude oil inventories pile up by 1.20 million barrels last week.
Meanwhile, the U.S. Energy Information Administration said today in its weekly crude oil report that the U.S. commercial crude oil inventories increased by 1.00 million barrels to 355.00 million barrels last week, and remain above the upper limit of the average range for this time of year.
Around 11:00 am ET, the Canadian dollar reached below the 1.38 level against the euro for the first time since July 8. The loonie may test support around the 1.3870 level on the downside, the point at which the 50-day simple moving average for the EUR/CAD pair in the daily chart.
The euro strengthened after the Swiss National Bank decided to cut its interest rate target to curb franc’s sharp appreciation. The SNB aims to bring the three-month Libor as close to zero as possible. The bank narrowed the target range for the three-month Libor to 0.00- 0.25 percent from 0.00- 0.75 percent.
Data from Eurostat showed that the Eurozone June retail sales rose 0.9 percent month-on-month, partly reversing May’s 1.3 percent fall. Economists had forecast a 0.5 percent increase for June. The May figure was revised from 1.1 percent decline reported earlier.
Annually, sales declined 0.4 percent in Eurozone following a revised 2.3 percent fall in May. The May figure was revised from 1.9 percent fall reported earlier. Economists expected a 1 percent annual decline for June.
Against the US dollar, the loonie fell to a 3-week low of 0.9649 around this time. If the Canadian currency weakens further, it may find target around the 0.9670 level, the point where the 50-day SMA of the USD/CAD pair in the daily chart.
Data from the U.S. was disappointing with the Institute for Supply Management showing slower than expected service sector growth in the month of July. Although the payroll processor ADP showing stronger than expected private sector job growth in July amid concerns that the data does not accurately reflect the current labor market conditions.
The Canadian dollar is presently trading at a 2-day low of 79.70 against the yen. If the pair sheds more than six pips, it may break below Tuesday’s fresh multi-month lows. As of 11:15 am ET, the loonie-yen pair traded at 79.77.