The Canadian dollar started the week higher against the US dollar. Oil prices rebounded after falling more than 4 percent last week and the usually non eventful speech by the Bank of Canada (BoC) Deputy Governor Carolyn Wilkins gave a boost to the loonie ahead of the awaited U.S. Federal Reserve rate decision on Wednesday.
Lower inventories in the United States and a supply limit from Saudi Arabia to Asian markets has taken crude off the lows of last week. The defining moment for oil prices will come on Wednesday with the release of the weekly oil inventories in the US. Inventories were forecasted to fall by 3.1 million barrels and instead they rose by 3.3 million sending oil prices lower. The rise in US oil production has more than offset the effect of the Organization of the Petroleum Exporting Countries (OPEC) and other major producers that have extended their production cut agreement into 2018.
Addressing a business school crown in Winnipeg the Deputy Governor of the Bank of Canada (BoC) Carolyn Wilkins said that: “As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required,”. The words from the Deputy Governor boosted the loonie as the market was expecting a rate hike in 2018 but now it could come as early as the end of 2017.
The USD/CAD lost 0.694 percent on Monday. The currency pair is trading at 1.3373 after the loonie got a boost from the Bank of Canada (BoC) through comments from Deputy Governor Carolyn Wilkins and a recovery of oil prices. Talk of a rate hike coming sooner rather than later appreciated the Canadian dollar. The Canadian benchmark rate stands at 0.50 percent and has been at the center of the debate as the main reason for a hot real estate market and high levels of household debt.
The speech by Carolyn Wilkins and the market reaction it triggered could be premature if the price of oil loses the current level of stability and the ongoing concern of a negative NAFTA renegotiation by the end of the year.
The massive Canadian jobs report on Friday has sparked optimism about the recovery of the economy and the central bank had already taken a rate cut off the table, but is now considering a rate hike which positively took markets by surprise as seen by the reaction of the CAD.
Oil rose 0.812 percent in the last 24 hours. The price West Texas Intermediate is trading at $46.16 after a forecast of lower inventories in the US as well as Saudi Arabia reducing the volumes it exports to Asian markets. The surprise buildup on the weekly US inventories released last Wednesday and the friction between Qatar and the Arab nations forced oil to drop over 5 percent.
Market events to watch this week:
Tuesday, June 13
4:30 am GBP CPI y/y
8:30 am USD PPI m/m
10:00 pm CNY Industrial Production y/y
Wednesday, June 14
4:30 am GBP Average Earnings Index 3m/y
8:30 am USD CPI m/m
8:30 am USD Core CPI m/m
8:30 am USD Core Retail Sales m/m
8:30 am USD Retail Sales m/m
10:30 am USD Crude Oil Inventories
2:00 pm USD FOMC Economic Projections
2:00 pm USD FOMC Statement
2:00 pm USD Federal Funds Rate
2:30 pm USD FOMC Press Conference
6:45 pm NZD GDP q/q
9:30 pm AUD Employment Change
Thursday, June 15
3:30 am CHF Libor Rate
3:30 am CHF SNB Monetary Policy Assessment
3:30 am CHF SNB Press Conference
4:30 am GBP Retail Sales m/m
7:00 am GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate
8:30 am USD Unemployment Claims
Tentative JPY Monetary Policy Statement
Friday, June 16
Tentative JPY BOJ Policy Rate
2:30 am JPY BOJ Press Conference
8:30 am CAD Core Retail Sales m/m
8:30 am USD Building Permits
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar 
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