The Canadian dollar continues its Via Dolorosa: after holding out against the slide in oil prices for a few days, enjoying a positive jobs report and some sort of correction, all hell has broken loose.
USD/CAD is trading well above 1.45, with a high of 1.4546 seen so far. On CAD/USD this is under 0.70. And it certainly goes hand in hand with oil prices.
WTI Crude Oil is trading under $30. No, it’s not the first time and also Brent went along that path. However, this time it may be more than a dip but perhaps we’re seeing the real thing. The fresh fall in Chinese stocks didn’t really help the mood.
Here is how it looks on the monthly chart: a big spike to sky high levels, reaching those seen in April 2003, when the Canadian dollar extended its gains following the US-led invasion of Iraq.
The upcoming week is a big one for the Canadian dollar: the Bank of Canada makes its rate decision. Last time this year, Stephen Poloz and his team surprised markets with a rate cut, which was explained as precautionary or as “insurance”. While lower rates could support the economy, the weak Canadian dollar already provides a lot of support.
In addition, we’ll get economic indicators: retail sales and inflation data. Inflation may be rising despite the fall in oil: imported goods such are pricier.
More: Is It Time To Cash In On USD/CAD Bets? – CIBC
And here is a fresh chart of WTI Crude Oil, showing us the lowest levels since early 2004:
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