The Canadian dollar is trading higher versus the greenback ahead of the release of U.S. crude inventories. The driving season in the U.S. has increased the demand for gasoline at cheaper prices, but has not done enough to push the price of crude beyond the current level. Crude inventories have not shown a huge drop although there might be a period of lag to compensate for the time it takes to refine.
The Organization of the Petroleum Exporting Countries (OPEC) is trying to influence the price of oil by making clear their intention to discuss a production freeze in their meeting next month. So far neither Saudi Arabia or Iran (the biggest producers) have made any official comments, which would lend credibility to the speculation. Russia has said officially that at this time they are not part of any agreement. The failure to reach an oil output freeze in March during the Doha summit where OPEC and non-OPEC producers met with the single goal of slowing down the drop in oil prices. The political differences between Saudi Arabia and Iran made it impossible to reach an agreement and there has been little effort to iron those differences ahead of the meeting next month.
The USD/CAD lost 0.31 percent in the last 24 hours. The pair is trading at 1.3123 on a week devoid of meaning fun economic indicators from Canada and the U.S.. The highlight this week will be the retail sales data in the U.S. to either confirm the strong USD trend that would lend credibility to the Fed rate hike narrative or as it has done in the past deflate the rally and again raise questions of a sustainable economic recovery going forward which would put into doubt a rate hike this year.The CAD has managed to trade below 1.32 despite the gain in the U.S. dollar on the back of oil volatility.
The price of West Texas oil went down 0.12 percent in the last 24 hours. Energy prices gave back the gains from Monday and finished at $42.51 after the optimism of a possible Organization of the Petroleum Exporting Countries (OPEC) output freeze being part of the agenda next month took a back seat as demand has shown no signs of growth, while at the same time producers are pumping at a record rate.
Market events to watch this week:
Wednesday, August 10
10:30am USD Crude Oil Inventories
5:00pm NZD Official Cash Rate
5:00pm NZD RBNZ Rate Statement
5:05pm NZD RBNZ Press Conference
Thursday, August 11
8:30am USD Unemployment Claims
6:45pm NZD Retail Sales q/q
10:00pm CNY Industrial Production y/y
Friday, August 12
2:00am EUR German Prelim GDP q/q
8:30am USD Core Retail Sales m/m
8:30am USD PPI m/m
8:30am USD Retail Sales m/m
10:00am USD Prelim UoM Consumer Sentiment
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar