2021.02.1906:38:00UTC+00Canadian Dollar Weakens Amid Falling Oil Prices, Risk Aversion

The Canadian dollar dropped against its major counterparts in the Asian session on Friday, as oil prices fell, while risk sentiment worsened on rising bond yields and weak U.S. data released overnight.

The deep freeze in Texas shut down refineries, denting the demand of crude over the coming weeks.

Refinery outages and the possibility of oil refiners making repairs before reviving operations stoked concerns about demand.

Asian markets declined as higher yields and dismal U.S. data triggered worries about the fragile economic recovery.

U.S. Treasury yields are hovering near one-year highs, driven by the so-called "reflation trade," which involves betting on price growth stimulated by fiscal spending and vaccination programmes.

The loonie dropped to 0.9890 against the aussie, its lowest level since January 7. If the loonie slides further, 1.00 is likely seen as its next support level.

The loonie depreciated to a 2-day low of 83.11 against the yen, off an early high of 83.40. The loonie may locate support around the 81.00 level.

The loonie edged down to 1.5364 against the euro from yesterday's close of 1.5322. The loonie is poised to challenge support around the 1.55 mark.

The Canadian currency slipped to 1.2714 against the greenback and held steady thereafter. At yesterday's close, the pair was worth 1.2674.

Looking ahead, PMI reports from major European economies are due in the European session.

Canada retail sales for December and U.S. existing home sales for January are set for release in the New York session.