Oil Headed to $40 Before Recovering to $42 Lifting USD/CAD
The Canadian dollar had a rough start to week with the release of the Canadian manufacturing sales report coming in below expectations. Forecasts called for a 0.3 percent growth given the weak currency, but sales of manufactured goods fell by -1.5 percent in September. Last month sales dropped by -0.2 percent in what could be a negative trend for the Canadian economy. The USD/CAD will end the trading day flat at 1.3331, but most of the price volatility came on the back of the price of oil. The USD/CAD touched highs of 1.3371 and a low of 1.3291 with an overall appreciation of 0.045.
The price of oil has dragged the CAD around. Crude prices continued the downward trajectory from last week, only to reverse course and end up with a gain after almost heading below the $40 price level. The uncertainty and tensions that arose after the Paris attacks and the G20 meeting in Turkey have complicated the pricing of energy. The attacks put a premium on crude as supply might be constrained, but on the other hand thanks to the OPEC the world is awash in plenty of crude with tankers full of oil sailing around the world which puts downward pressure on the price of a barrel.
Liberal Government Makes Global Debut at G20 Meeting
The Government of Prime Minister Justin Trudeau made its debut in the world stage in Turkey with the participation of Canada in the G20 meeting. The terrorist attack in Paris dominated the summit of world leaders with the focus taken away form the global economy and instead given to immigration and security. Canadian Finance Minister Bill Morneau announced that the Liberal government would follow through with one of its campaign promises of pulling back air strike support against ISIS, but continues to be committed to the coalition. The new Finance Minister made comments on the impact of the low oil price on the Canadian economy and the infrastructure spending plan drafted to stimulate growth made by his party before the elections.
CAD events to watch next week:
Thursday, November 19
8:30 am CAD Wholesale Sales m/m
Friday, November 20
8:30 am CAD Core CPI m/m 8:30am CAD Core Retail Sales m/m
8:30 am CAD CPI m/m
8:30 am CAD Retail Sales m/m
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar