The Canadian dollar is strong against greenback due to the upbeat Canadian economic data and greenback decline. A mixture of rising oil prices and rising Canadian wholesale sales for March has provided a boost for the Canadian Dollar.

Loonie seems  to be strong this week after Canada’s wholesale transactions beat forecasts and rose by 2.8% in March.

CIBC’s senior analyst, Royce Mendes, commented on Canada’s rising petroleum and coal products industry sales:

‘The good news is that the increase in March factory sales was relatively broad based, with 17 of 21 industries gaining ground, so not overly reliant on the pickup in motor vehicle production.’

The Canadian dollar has also benefited from an uptick in oil prices. The oil prices was lifted by European economic reopening’s and rising U.S. demand after prices fell earlier due to surging coronavirus cases in Asia.

Elsewhere as per the recent data, Canadian home sales, prices and starts all fell in April compared with the previous month, as some of the frenzy of recent months began to unwind, although activity remains strong,

Canada’s inflation report for April is due on Wednesday, which could offer clues on the Bank of Canada policy outlook. BoC Governor Tiff Macklem said last Thursday that “If the Canadian dollar continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy.”

On the other hand, Greenback suffered as Treasury yields fell amid renewed expectations the United States will not hike interest rates anytime soon.

Dallas Federal Reserve President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year, fueling a further decline in bets that inflationary pressure could force the Fed to act sooner.

This week a host of Fed policymakers are scheduled to speak, and the U.S. central bank will also release minutes from its most recent meeting, which may give indications about where monetary policy is headed this year.

USD/CAD 4 Hour Chart:

Support: 1.2054 (S1), 1.2039 (S2), 1.2016 (S3).

Resistance: 1.2092 (R1), 1.2114 (R2), 1.2130 (R3).

The rising oil prices and Canadian economic data and US dollar weakness led to the strength of the loonie against greenback. We expect a bearish trend for USD/CAD.