The USD/CAD had a volatile trading session that saw the price fluctuate 0.66 percent intraday. The currency pair shot up towards the 1.34 price level after the third quarter gross domestic product data was released. The Canadian economy shrank 0.5 percent in September versus an expected growth of 0.1 percent. Statistics Canada also reported the final third quarter GDP growth figures at 2.3 percent.
The contraction in September was due to the weakness of the energy sector. The Canadian economy has not been able to offset the losses that have hit the industry after oil continues to trade near $40 a barrel.
The USD/CAD traded at 1.3398 after the GDP miss. The loonie managed to regain some ground on the back of an oil price rebound in the middle of the day and remained on a tight trading range around 1.3370 awaiting the Bank of Canada statement tomorrow.
The BOC was proactive earlier in the year and has cut the Canadian benchmark interest rate twice this year to record low 0.50 percent. Governor Poloz correctly warned the market that the Canadian economy would be hard hit by the sustained low prices of energy. The province of Alberta had at one time been the growth engine of the nation, but is now losing jobs as other sector try to pick up the slack. Poloz has talked down the loonie in an effort to gain a price low advantage for the currency in an effort to boost Canadian exports.
Oil Flat with Intraday Volatility Awaiting OPEC Meeting
The Organization of the Petroleum Exporting Countries (OPEC) meeting on Friday has the potential to “stabilize” the price of oil if as Saudi Arabia hinted in a press release that is their intention. With scarce details to go by, this could mean a coordinated agreement between members to cut production.
OPEC members have lost their iron grip on the price of crude as new technologies and even the lift of Iranian crude embargo threaten to add even more supply. Dwindling demand as emerging markets slowdown has nations who depend on energy sales to balance their budgets desperate for a solution. It remains to be seen if Saudi Arabia will take their side, or if it will continue to fight a price war to gain market share versus other producers.
CAD events to watch this week:
Wednesday, December 2
10:00 am CAD BOC Rate Statement
Friday, December 4
8:30 am CAD Employment Change
8:30 am CAD Trade Balance
8:30 am USD Non-Farm Employment Change
8:30 am USD Trade Balance
10:00 am OIL OPEC Press Conference
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar