CAD Lower But Bounces Slightly After Oil Surge
The Canadian dollar continued to fall versus the U.S. dollar on Monday. The USD was off to a roaring start to the trading day as the USD/CAD broke through the 1.34 price level and climbed as high as 1.3436 before the CAD got support from rising oil prices. The Canadian dollar was able to appreciated and take the pair to session lows of 1.3336 while it currently trades at 1.3373
All Signs Point to Fed Rate Hike in December
Investors are confident that the U.S. Federal Reserve will finally raise rates for the first time in a decade at the end of the December Federal Open Market Committee (FOMC) meeting. The expectations of an interest rate divergence have boosted the USD ever since the tapering of American quantitive easing was announced. The October FOMC statement sparked the possibility that the central bank policy makers would follow through after the disappointments in June and September. A strong NFP and encouraging comments from Fed members followed. The path to the first rate hike seems clear and only next week’s non farm payrolls report could potentially derail, but probability is low.
Oil Rebounds After Saudi Statement
Oil had a volatile start of the week while after breaking under the $40 price level West Texas crude climbed $2 after comments from Saudi Arabia. The OPEC’s biggest producer issued a statement announcing it will work with fellow producers to stabilize prices. OPEC is meeting in Vienna on December 4, but the Saudis issued a rare inclusive invitation to negotiate with non members.
Next week will have less trading activity than usual as there is very little on the economic calendar with Japan and the U.S. have holidays that will reduce liquidity in the markets. There are no major releases expected in Canada, and with lower liquidity the loonie could be exposed if there are any unscheduled events that could shock the market during the week. The next big event in the horizon for the Canadian dollar is the U.S. non farm payrolls and Canadian employment data to be released on December 4.
CAD events to watch this week:
Friday, November, 27
8:30 am CAD RMPI m/m
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar