USD/CAD kisses 1.3500 amid weaker oil prices, US PMI and Canadian Retail Sales in focus

• USD/CAD has refreshed its weekly high at 1.3500 despite a subdued performance from the US Dollar Index.
• Declining oil prices have weighed heavily on the Canadian Dollar.
• A contraction in Canadian Retail Sales data will be a relief for the BoC.

The USD/CAD pair has printed a fresh weekly high of 1.3500 in the Asian session. The Loonie asset has continued its two-day winning spell after overstepping Thursday’s high of 1.3490. The Canadian Dollar has witnessed immense pressure amid a sheer decline in oil prices. The black gold has witnessed sheer losses as more rate hikes from global central banks will put a serious dent in global oil demand.

The US Dollar Index (DXY) has turned sideways around 101.80 ahead of the release of the preliminary United States S&P PMI data. Investors want to scrutinize the impact of higher interest rates by the Federal Reserve (Fed) on economic activities so as to prepare an executable action. As per the consensus, the Manufacturing PMI will land at 49.0, lower than the former release of 49.2. The Services PMI is also seen lower at 51.5 against the figure of 52.6 released earlier.

Meanwhile, S&P500 futures are showing mild gains in the Asian session. Investors should take a cautious approach before injecting funds into S&P500 as earnings season is picking up pace and midcap stocks would take the lead ahead. A subdued performance from the USD Index is weighing on US Treasury yields. The alpha generated on 10-year US Treasury bonds has dropped below 3.53%.

The Canadian Dollar is expected to remain in action ahead of Retail Sales data. The street is anticipating a contraction in monthly Retail Sales data (Feb) by 0.5% vs. an expansion of 1.4% recorded in January. Bank of Canada (BoC) Governor Tiff Macklem is worried that a shortage of labor and upbeat retail demand could force the central bank to raise rates further. A contraction in Retail Sales data will be a relief for the BoC.