USD/CAD: Loonie Flat as Oil Price Recovery Reverses

The US dollar is flat against the Canadian dollar on Thursday morning, putting pause to a two-day decline in the exchange rate ahead of the release of US inflation data. Elsewhere market sentiment has turned more risk-averse after China reported a spike in the number of coronavirus cases.

USD/CAD was higher by 1 pip (+0.00%) to 1.3252 with a daily range of 1.324 to 1.326 as of 9.30am GMT. The currency pair has been rangebound on Thursday around 1.325. Weekly losses now stand at -0.44%.

CAD down due to a slide in oil price

A deep slide over two days have seen the USD/CAD exchange rate slide to one-and-a-half week lows. Some upbeat comments from Governor of the Bank of Canada Stephen Poloz have been offset by a slide in the price of oil and the US dollar benefitting as a haven.

Governor Poloz told a panel in Australia that the Canadian economy is in “a pretty good place” and said rates would have had to have fallen further without fiscal stimulus in Canada. The comments step back slightly from the last Bank of Canada meeting but the general sense among traders appears to be that the door remains open for a Canadian rate cut.

The price of oil has rolled over from a two-day gain after the Organisation for Petroleum Exporting Counties (OPEC) reduced its forecasts for oil demand in its monthly report. The slashed forecasts come exactly a day after similar were revisions were made at the International Energy Agency (IEA) headquartered in Paris France. The downward revisions add to lowered forecasts the cartel made in January.

USD keeps safe-haven bid as new oil contracts are offered

The dollar has been bid as a haven while oil future contracts were offered when Chinese authorities revealed they have been understating reported cases of the coronavirus. A new methodology of diagnosis incorporating a CT Scan has caused a  spike in the number of cases and deaths from the coronavirus on Thursday. The number of deaths rose by 254 and China reported 15,152 more cases of the virus officially called COVID-19. That puts the total number of cases near 50,000.

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