The Canadian dollar rallied today. The rally was likely a result of the rising prices for crude oil — Canada’s major export commodity, which often has a big impact on the performance of the loonie.
With almost no domestic macroeconomic data to drive the Canadian currency this week, it had to look elsewhere. As it often happens, crude oil provided a direction for the loonie, this time dragging it along to the upside. Crude gained after US crude oil inventories fell by 6.1 million barrels last week — more than two times the forecast decrease by 2.6 million. The US oil reserves were at the lowest level since February 2015.
Another important factor for the currency for a while were NAFTA negotiations between Canada, the United States, and Mexico. Some analysts believe that the outcome of today’s meeting between the leaders of the USA and the European Union should reveal how much (or how little) the world’s biggest economy is willing to compromise in trade dealings with its allies. A positive result will lead to more optimism about the talks between the North American nations, and vice versa — a negative outcome will cause pessimism about the North American Free Trade Agreement.
USD/CAD declined from 1.3153 to 1.3105 as of 16:00 GMT today. EUR/CAD dropped from 1.5366 to 1.5303. CAD/JPY gained from 84.52 to 84.71, though retreated from the daily high of 84.93.
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