The US dollar is slightly lower against the Canadian dollar on Thursday morning as rising concern about the possibly of an outbreak in the United States offset another plunge in oil prices. The Canadian dollar had fallen fowl of forex traders on Wednesday when oil prices slumped another -2%, totalling an over -8% decline in just three days.
USD/CAD was down by 9 pips (-0.08%) to 1.3288 with a daily range of 1.3318 to 1.3348 as of 9.30am GMT. It’s a slight pullback from the +0.49% gain on Wednesday, meaning a +0.75% gain for the week so far.
The CAD benefits from its position as a haven from COVID-19
The Canadian dollar had been holding its own at the start of the week, seen as a relative haven from the coronavirus outbreak that has hurt Asian and other commodity-linked currencies like the Australian dollar. However WTI crude oil futures contracts crumbling below $49 per barrel has bestowed more weakness on the Loonie. The coronavirus demand destruction for oil prices is difficult to ignore as public events get cancelled and countries increase border checks. This morning it was reported that Saudi Arabia has closed its border to all foreigners, even those travelling on a holy visit to Mecca.
$50 per barrel in WTI crude had been acting as a key price support, having held up several declines in the past two years. The drop in the oil price below this level sets it on a course back towards the December 2018 low at $42 per barrel. The declines in WTI crude are being matched by the Brent crude oil contract, which at $52 per barrel is much closer to the December low at $50.23.
The dollar is again being sought out as a haven. In a sign of the prediction that haven assets will continue to outperform, investment bank Goldman Sachs has raised its target on the price of gold to $1800 per oz. Gold currently sits at $1647 per oz.
Vice President Pence will head up a coronavirus task force in the United States, which will meet for the first time on Thursday at 7.30pm GMT.