The Canadian dollar managed to recover quite nicely from the 11 year lows against the greenback, thanks to a weak Non-Farm Payrolls report from the US resulting in a weaker USD.
But the party may have come too soon. First, a weak US economy means less demand for Canadian products. But also Canada’s main export, oil, isn’t exactly on the rise.
Prices of the black gold are certainly above the August lows, but are far from rising. At the time of writing, WTI Crude is just under $46 and Brent at $48.50. This is well within the low range.
And it seems that price pressure is set to continue: The United Arab Emirates (UAE), a big producer of oil, has absolutely no plans to change investment plans for increasing production anytime soon.
And the world’s oil superpower, Saudi Arabia, has announced big discounts for oil sent to Asia: discounts of $1.70 to $2 on the price of barrels to that region and 30 cents to oil sent to the US are on the cards.
Cheaper prices for the world and specifically for the US are set to weigh on the loonie.
USD/CAD currently trades at 1.3130, closer to support at 1.30 and far from the 11 year high of 1.3460 seen last week. However, we’ve seen that markets usually aren’t that keen to buy the C$.
Here is the USD/CAD chart:
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