Canadian Dollar Hoping For Oil Improvement After The Dovish BOC Twist

  • The dovish BOC twist, oil, and trade weighed on the loonie.
  • A lighter Canadian calendar leaves petrol and Powell in change
  • The technical picture remains bullish after the pair recaptured uptrend support.

This was the week: Oil and tumultuous trade

The Bank of Canada decided to leave interest rates unchanged as expected but surprised with a dovish shift. While they hope the new trade agreement to continue supporting the economy, they see non-inflationary growth. If there is no risk of higher inflation, there is no rush to raise rates. This shift sent the loonie lower.

Earlier in the week, the C$ jumped on the reports from Buenos Aires about the Trump-Xi Summit. The Presidents of the world’s largest economies agreed on a trade truce. However, there were differences between the statements coming out from both countries. Some respite was seen after China aligned most of its message with that of the US, but the arrest of Meng, Huawei’s founder’s daughter, and CFO at the Chinese firm dampened the atmosphere. CAD, a risk currency, suffered.

Oil remained central to the movements in the loonie. The province of Alberta decided to limit the production of oil as much of it is stuck in pipelines in the US. The abnormal move helped shrink the spread between Canadian crude, the Western Canadian Select (WCS) and America’s West Texas Intermediate. This provides a bit of relief for the loonie.

Oil ministers from OPEC and non-OPEC countries gathered in Viena and tried to strike a deal to curb production and lift prices. Iran, struggling under US sanctions, refused to cut output and was reportedly the stumbling block to cutting a deal. Others blamed Russia. The slide in prices weighed on the C$.

US data was OK.

Canadian events: Mostly oil, but also housing data

The price of the black gold remains in the limelight. The loonie will initially react to the fallout from the OPEC meeting and will also await further developments on the production limits in Alberta. The weekly inventories report on Wednesday will likely remain of high importance once again.

1 2 3
View single page >> |

Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.