The US dollar depreciated 0.539 percent against the Canadian dollar in the last 24 hours that saw the loonie follow the evolution of oil prices. The USD / CAD was trading at 1.3685 day low after earlier trading at 1.3859 session.
The loonie rose thanks to the recovery in oil prices which in turn was driven by inventory US gasoline. The CAD has been linked at the hip with the price of energy and had a nearly 1 correlation with volatile crude. The uncertainty of the oil market is the result of different actors with different objectives in a world that is awash with the black stuff. Although the Organization of Petroleum Exporting Countries (OPEC) and Russia have reached an agreement to "freeze" the output. We still do not know today if they freeze to record levels (Jan highs) or if they reach another record level and then freeze.
Iran, although should not part of OPEC to participate in the gel that the nation tries to return to pre-sanction levels of production could mean a doubling of their production today. The market share remains a concern for Saudi Arabia yesterday reminded the market that it will not cut production. The purpose of the freeze agreement was to stabilize falling prices and for the moment, the strategy worked. Volatility will remain high and that stability could disappear at some point the vast supply compared to a contraction of energy demand worldwide.
US crude stocks rising, but gasoline and distillates contract.
the oil inventory report and the crude distillate was mixed with a higher than expected rise in crude oil, but the surprise was the higher than expected contraction gasoline inventories. Crude rose 3.5 million barrels given there was no production cuts in the US and storage at Cushing Texas is a big problem. Gasoline production accelerated and inventories fell 2.24 million barrels that triggered the price of West Texas and Brent that this is a positive sign of growing demand.
West Texas rose 1.54 percent and Brent saw an increase of 3.31 per cent a volatile day for energy. Comments of energy ministers were contradictory. Yesterday, the oil minister of Saudi Arabia was the blame on the current low prices on the North American producers, ironically while attending an oil conference in Houston, Texas.
The rest of the week will have limited Canadian participation data and the market will pay attention to US data on durable goods, oil prices and comments from ministers of global finance ahead of the G20. US Treasury Secretary Jack Lew made no promise of an agreement or action to come as a direct result of the Shanghai meeting, some bubble burst of waiting a Shanghai Model Agreement offers, echoing the Plaza Accord which saw the US dollar depreciates cooperation economic superpowers in 1985. the US Treasury said that any fiscal stimulus is accepted by the G20 currency manipulation should not be tolerated.
CAD events to watch this week:
Thursday, February 25
4:30 GBP Second Estimate GDP q / q
8:30 USD core durable goods orders m / m
USD unemployment claims
Friday, February 26
8:30 USD prelim q / q GDP
* All times EST
for a full list of events planned in the foreign exchange market, visit the economic calendar MarketPulse
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