The Canadian dollar fell on Tuesday after comments from Saudi Oil Minister Ali Ibrahim Naimi that current agreement between Organization of petroleum exporting countries (OPEC) and Russia do not include the reduction of production to an audience in Houston. The Secretary General of OPEC had earlier blamed the non-OPEC producers especially US shale companies.
The price of West Texas fell under $ 30 a barrel and pulled down the currencies of commodities, including the Canadian dollar. The USD has advanced 0.549 percent compared to the CAD over the past 24 hours following the 5.94 percent drop in WTI and Brent to 4.34 percent.
USD / CAD traded as low as 1.3695 but as oil prices continued to fall the pair recorded a high 1.3821. The commitment of the Government of Canada to add stimulus in its budget March 22 was able to bring the dollar to trade below 1.38.
The Canadian government expects a deficit of $ 2.3 billion in 2015, $ 18.4 billion in 2016-17 and $ 15.5 billion in 2017-18. The deficit figures are before taking into account the new stimulus to be unveiled on March 22
The Liberal government announced the date on which it will unveiled its first highly anticipated budget. After changing some campaign promise to return to a surplus by the end of 4 years at an unspecified date now due to global macroeconomic conditions in the market now expects an impressive revival of fiscal policy. There was no indication of how committed the government is to make a first impression with the aggressive output of the budget that will keep the CAD traders on the lookout for comments from Finance Minister Bill Morneau.
The Bank of Canada (BoC) model argues that a stimulus package of $ 10 billion was more upward impact on GDP by one percentage point rate cut by the bank Central. The BoC cut twice in 2015 and held his hand on his meeting in January opting to wait for the budget before planning his next move. The central bank has not reduced using unconventional tools such as negative rates for the Canadian economy back on track after the shock of oil prices.
The release of US oil inventory tomorrow could add a further decline in oil prices, if the expected increase of 3.2 million barrels materializes. Canadian economic indicators will be scarce this week and stocks of tomorrow and the G20 meeting in China beginning Friday could have a direct impact on the loonie. The G20 is expected to bring some stability that the 20 largest economies will try to cooperate to put an end to a global recession that persists despite individual efforts. The IMF and OECD have both urged G20 countries to find a way to get a group effort and prioritize fiscal stimulus on the monetary policy
CAD events to watch this week :.
Wednesday, February 24
10:30 USD crude oil inventories
AUD 7:30 p.m. private expenditures q / q
Thursday, February 25
4:30 GBP Second Estimate GDP q / q
8:30 USD durable goods orders m / m
USD unemployment claims
Friday, February 26
8:30 USD prelim GDP q / q
* All times EST
for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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