USD/CAD: Loonie Benefits from Surging Oil Prices, Trade Optimism

USD/CAD is declining on Thursday, extending the bearish mood that has been around since the start of December. Both the US and Canadian markets are closed on Boxing Day, after having a day off on Christmas.

Currently, the pair is trading at 1.3126, down 0.26% as of 3:40 PM UTC. The price is trying to recover some of the daily losses, after touching a low at 1.3119.

The Loonie is supported by surging oil prices, as Canada is an oil-dependent economy. Brent crude brand rose to almost $68 per barrel for the first time in three months, driven by a recent report on lower US crude inventories, fresh optimism over the US-China trade deal, and OPEC’s attempts to contract production.

On Tuesday, the American Petroleum Institute announced that US crude stocks declined by 7.9 million barrels last week, way more than most analysts expected.

Thus, Brent crude reached $67.86 a barrel, which is the highest level since September 17. US West Texas Intermediate (WTI) crude gained 55 cents to $61.66. Both brands have increased by 0.90% so far on Thursday.

Elsewhere, the OPEC+ group, which includes OPEC and 10 non-OPEC countries like Russia and Mexico, agreed earlier in December to cut production. In total, the cartel will give up 2.1 million barrels per day starting from January 1, 2020.

Oil prices are also supported by increasing hopes that the US and China would finally end the trade war that has lasted for about 17 months. On Tuesday, US President Donald Trump said that he and Chinese President Xi Jinping would have a signing ceremony to ink the phase one agreement. Nevertheless, the optimism benefits both the Loonie and the US dollar.

The Greenback will try to regain the lead on strong labor market data, according to which initial jobless claims declined more than expected last week. Elsewhere, US consumers spent more online during the holiday shopping season, Mastercard said yesterday, with e-commerce sales touching a record high, up 18.8% compared to the 2018 period.

Mastercard’s senior adviser Steve Sadove commented:

“Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices.”

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.