Canadian Dollar Strengthens After Better Than Expected Retail Sales Data

The Canadian dollar gained ground against its major counterparts in the European session on Wednesday, after a data showed that the nation's retail sales grew more than forecast in March, underpinning confidence in economic growth.

Data from Statistics Canada showed that retail sales rose 1.1 percent month-on-month in March, after rising a revised 1 percent in the previous month. Economists had expected a 1 percent rise for the month.

Core retail sales, excluding motor vechicle and parts dealers, grew 1.7 percent, following a revised 0.7 percent increase in April. Economists had forecast a 0.9 percent increase.

Meanwhile, oil prices drifted lower after industry data showed a surprise jump in U.S. crude inventories and Saudi Arabia said it was committed to a balanced and sustainable oil market.

The API reported late Tuesday that U.S. crude stockpiles rose by 2.4 million barrels for the week ended May 17, compared with analysts' expectations for a decrease of 599,000 barrels.

Official data from the U.S Energy Information Administration is due at 10:30 am ET.

The loonie traded mixed against its major rivals in the Asian session. While it rose against the aussie and the yen, it held steady against the euro. Against the greenback, it declined.

The loonie advanced to near a 4-week high of 82.62 versus the yen from Tuesday's closing value of 82.42. If the loonie rises further, 84.00 is possibly seen as its next resistance level.

Bank of Japan board member Yutaka Harada said monetary easing should be strengthened further without delay.

"If the economy deteriorates to the extent that achieving the 2 percent price stability target in the long term becomes difficult, I view it as necessary to strengthen monetary easing without delay," he told business leaders in Nagasaki.

The loonie that closed Tuesday's trading at 1.3405 against the greenback appreciated to a new 4-week high of 1.3358. The next possible resistance for the loonie is seen around the 1.32 region.

The loonie spiked up to near a 2-month high of 1.4925 versus the euro, compared to 1.4959 hit late New York Tuesday. On the upside, 1.47 is likely seen as the next resistance for the loonie.

The loonie reached as high as 0.9202 against the aussie, recording its highest level since October 2018. The pair was worth 0.9227 at yesterday's close. The loonie is likely to find resistance around the 0.91 region.

Data from Westpac showed that Australia's leading index dropped again April and remained consistently negative over the past five months, signaling that economic growth in the first quarter is likely be below trend.

The Westpac- Melbourne Institute Leading Index declined to -0.47 percent in April from -0.13 percent in March.

Looking ahead, at 10:00 am ET, New York Fed President John Williams will speak about US homeownership at the Federal Reserve Bank of New York.

The Federal Reserve's minutes from the May meeting are scheduled for release at 2:00 pm ET.