USD/CAD flat on the day

USD/CAD rose earlier but erased the gains after a surprise drawdown in US energy inventories led to a rally in oil prices.

The loonie is the best G10 performer this year but has moved sideways since mid-March, in part due to rising covid cases and new lockdowns. Those numbers remain concerning but the vaccine rollout is accelerating and will be widely available in May or June so the picture will turn quickly. Moreover, the March jobs data was extraordinarily strong and retail sales have been robust. Obviously those will reverse in April but they speak to underlying strength and demand.

With the US dollar coming under some broader pressure and commodities coming back to life, I suspect we will see a breakdown in this pair before long and a quick run to 1.2400 and below.

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