The Canadian dollar is on the fall. After showing some resilience to the fall in oil prices, the recent round already found it vulnerable, yet slippery oil is not the only reason.
USD/CAD reached 1.1867 before settling around 1.1850. Can it attack 1.20? Here are three things weighing on the loonie:
- More falls in oil prices: Canada’s key oil exports are not all that matter for the economy, but certainly matter for the currency. The fall did not stop, with WTI settling around $47 and Brent oil dipping below this round number. Canada’s own oil prices are even lower.
- Stronger US figures: after some mediocre figures from the US at the wake of 2005, we had two positives: ADP NFP showed a gain of 241K jobs in the private sector, and the US trade balance deficit dropped below $40 billion in November. This supports the greenback across the board.
- Canadian trade deficit: Contrary to the US, Canada saw disappointing data from its trade balance: it slipped to negative territory with -0.6 billion, worse than 0.2 billion expected. In addition, October’s number was revised to a deficit.
Here is the chart showing the recent rise:
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