The Loonie fell to a 12 year low even as the Canadian trade balance showed a positive shrinking of the trade deficit. Canadian exports grew for the first time in four months narrowing the gap to $1.99 billion beating expectations of a $2.60 billion trade balance deficit. Exports gained 0.40 percent boosted by shipments of auto along with raw materials such as metal ore and forestry products.
The USD/CAD appreciated 0.663 percent in the last 24 hours even as the Federal Reserve released the minutes from its monetary policy meeting in December. That historic FOMC meeting brought the much-awaited interest rate hike to the market, so there was much expectation around what went on behind the scenes. There was some disappointment as the apparent united front from Fed policy members was a fragile construct as various members considered their decision to vote for the rate hike as too close to call even as they supported it. Inflation concerns in the U.S. central bank had the USD lower against most majors, but the CAD was on the blackfoot as energy prices continue to spiral downwards.
The price of oil dropped to below $34 for West Texas crude. Energy prices have dropped by close to 5 percent in the past 24 hours as there are plenty of signs that the market oversupply of the black stuff is set to continue with very few indications that demand will match the pace of production.
Global accounting firm Deloitte is forecasting that the price of crude will remain below $50 until well into 2017 further complicating the chances of growth for the resource heavy Canada. The diplomatic battle between OPEC members Iran and Saudi Arabia is not helping matters as production from the group will continue to rise, even as most of its members need a higher price of crude to balance their budgets.
Bank of Canada Governor Poloz will speak in Ottawa tomorrow and the market will be looking for comments after the positive Canadian trade balance and the caution Fed FOMC minutes which might force the central bank to act sooner rather than later to further ease monetary policy. The BOC cut rates twice in 2015 and now the futures market is pricing a 50 percent chance the Canadian rate could be cut in March if the fall in price of oil continues.
CAD events to watch this week:
Thursday, January 7
8:25am CAD BOC Gov Poloz Speaks
8:30am USD Unemployment Claims
7:30pm AUD Retail Sales m/m
Friday, January 8
8:30am USD Non-Farm Employment Change
8:30am USD Unemployment Rate
8:30am CAD Employment Change
8:30pm CNY CPI y/y
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar 
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