The Canadian dollar reversed some of the earlier losses of the week following the publication in crude inventories States STATES 10: 00 am EDT Wednesday. The Energy Information Administration (EIA) released the latest weekly report that showed the shrunken stocks of 3.4 million barrels. The forecast called for a gain of 500,000 to 750,000. The gross deficit pushed higher energy prices and, in turn, took the CAD for the ride.
The correlation between oil prices and the strong Canadian dollar. The decline in production from the oil sands Canadian producers increased the price of energy, and in turn boosted the loonie. The uncertainty surrounding oil prices will continue like Alberta wild fires raging on and the Organization of Petroleum Exporting Countries (OPEC) division in its ranks could be a freeze on oil production almost impossible to sign.
CIBC joined the ranks of institutions issuing downgrades to growth in the second quarter of the Canadian economy. TD, RBC and BMO have expected a flat to negative growth in the second quarter of 2016. The downward pressure on the economy could lead the Bank of Canada (BoC) back in action sooner than originally planned. The BoC was active in 2015 and decided to work with the Government of Canada and wait for the effects of the fiscal stimulus announced in March. The effects which would not be felt until the fall, that being the reason was not expected that the Canadian central bank to make monetary policy movements until 2017. The impact of wild fires and deterioration of trade could lead to lower rates, especially if things south of the border also changed radically with the Fed in a patient mode that could easily turn into tightening if the stalls of the US economy.
USD / CAD lost 0.545 percent in the last 24 hours. The pair is trading at 1.2846 after the loonie recovered with crude rising earlier today. West Texas jumped 3.34 percent and is trading at $ 45.60 with crude oil inventories in the US to come in lower than expected at -3.4 million barrels last week. The decrease acted as a short in the arm for crude oil as the global reserve US remains near record highs as global supply has created a glut as demand declined.
production of Canadian crude oil is on its way back to normal after suffering interference from lights wild in Alberta rich in oil. Although none of the oil sands facilities were damaged by the natural disaster, security concerns for the closure and evacuation of entire cities who work these facilities. The disaster has posted about one million barrels per day. The reduction in production has allowed the price of oil and the Canadian dollar, but placed Canada against the ropes as it will mean a serious impact on growth.
Bank of Canada (BoC) Deputy Governor Carolyn Wilkins sounded somewhat optimistic about growth in Canada earlier today when she said: "There are a lot of downside risks, but I will say though that the most likely thing is that the economy will continue to grow. "Not exactly the most confident argument, but typical policymaker response to a complex problem. Deputy Governor Wilkins presented the greatest risk is still Chinese slowdown especially for an economy dependent on resources yet, despite all the efforts of the Bank of Canada. the central bank is expected to remain on the sidelines for most of this year, but cold sores and uncertainty over prices oil and China could act sooner than later
events USD / CAD to watch this week.
Thursday, May 12
8:30 claims USD unemployment
Friday, May 13
8:30 USD Core retail sales m / m
8:30 USD PPI m / m
8:30 retail sales USD m / m
10:00 am USD prelim UoM Consumer Sentiment
* All times EDT
for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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