• Canadian Dollar reverses sharply lower against the US Dollar after a decline in Oil prices and strong sentiment data boosted the Buck. 

• Oil falls from weaker-than-expected Chinese growth data for Q2 and the reopening of Libya’s largest Oil field. 

• A thick knot of technical support levels just below 1.3100 further provides a technical foundation for the reversal.

The Canadian Dollar (CAD) reverses on a dime and slips lower against the US Dollar (USD) on Monday, tracking the decline in global Oil prices, Canada’s primary export. An unexpectedly strong Michigan Consumer Sentiment Index lends the USD confidence, giving momentum to the reversal in USD/CAD. 

The USD/CAD pair trades in the 1.32s as the US session gets underway.  

Canadian Dollar news and market movers 

• The Canadian Dollar trades lower against the US Dollar (bullish for USD/CAD) on the back of a fall in global Oil prices. 

• WTI Crude Oil declined from a peak above $77 a barrel to a low of $73.70 reached on Monday during the Asian session. Crude Oil is Canada’s largest export, so changes in price can impact on the demand and value of the CAD. 

• The fall in Oil price was put down to an unexpected slowdown in China’s second quarter GDP data and the resumption of Libyan supply after a brief outage, according to Oilprice.com. 

• Chinese GDP expanded by 6.3% in Q2 on year – below the 7.3% forecast by economists, according to data from the National Bureau of Statistics of China released on Monday morning. 

• Quarter-on-quarter Chinese GDP rose 0.8%, beating the 0.5% estimate, but lower than the 2.2% of Q1. 

• Oil prices were further depressed after Libyan production came back online following a brief outage amid protests by the Al-Zawi tribe over the kidnapping of the Libyan Finance Minister, Faraj Bumatari. His release led to the reopening of the Sharara and El Feel Oil fields on Monday, according to an analysis by Oilprice.com. 

• Several institutional analysts are bearish in the medium-term regarding the Canadian Dollar versus the US Dollar, seeing the pair likely rising to 1.37-38 during H2 of 2023. 

• Nomura expects rate differentials and greater growth in the US as the main factors driving USD/CAD higher. 

• For the National Bank of Canada, the negative effect of a global economic slowdown on commodity prices and Oil is the main factor that will drag CAD lower in H2, in a note cited on Poundsterlinglive.com. 

• After several lower-than-expected inflation releases last week put a damper on the Greenback, the release of the University of Michigan Consumer Sentiment Index on Friday reversed the slide. 

• US Michigan Consumer Sentiment rose to 72.6 in July according to preliminary data – well above the 65.5 predicted and the 64.4 previous. 

• This reinvigorated bullish expectations for US growth were overall positive for USD. 

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