The Canadian dollar traded in a tight range on Monday. Last week the loonie touched 18 month highs after Bank of Canada (BoC) Deputy Governor Carolyn Wilkins and Governor Stephen Poloz made comments suggesting the central bank could be ready to hike interest rates sooner than the market was anticipating. The statements were made one day apart in usually non-eventful business school setting and a radio interview. The CAD ended the week on a positive note, despite the U.S. Federal Reserve raising the benchmark rate for the second time this year. Political uncertainty offset the gains even though Fed Chair Janet Yellen was hawkish on growth.
Fed members will be one of the market highlights during a week that features few major economic releases. New York Fed President Dudley supported the decision from the US central bank and expects further rate hikes, despite the softening of inflation.
Oil is trading lower ahead of Wednesday’s US crude inventories report. The rise of US production has all but cancelled the benefits to the price of crude that the Organization of the Petroleum Exporting Countries (OPEC) and other producers wished to achieve with their historic production cut agreement.
The USD/CAD gained 0.054 percent on Monday. The currency pair is trading at 1.3220 as the USD is showing signs of life after a difficult week where despite the Fed hiking rates the uncertainty surrounding the Trump Administration made it impossible for the greenback to capitalize on the hawkish rhetoric.
Oil prices fell by 0.701 percent in the last 24 hours. The price of West Texas Intermediate is trading at $44.33 after news that Nigeria and Libya are soon to come back to full production following several disruptions in supply. The two OPEC members were not part of the production cut agreement given the problems they had with their production pipeline. The return of the two producers to full force could be temporary given the fragile stability in both nations, but in the short term could hurt crude prices driving them even lower.
Last week the weekly inventories of crude in the US fell by 1.7 million when a 2.3 million drawdown had been expected. The biggest surprise came in a large buildup of gasoline when a contraction was expected. The oil market has been guided by the weekly inventory numbers as the best efforts of the OPEC to reduce supply appear to have reached their limit as the US has ramped up production and keeps investing in new technology.
Market events to watch this week:
Tuesday, June 20
2:30 am CHF SNB Chairman Jordan Speaks
4:45 am CHF SNB Chairman Jordan Speaks
Wednesday, June 21
10:30 am USD Crude Oil Inventories
4:00 pm NZD RBNZ Rate Statement
5:00 pm NZD Official Cash Rate
Thursday, June 22
8:30 am CAD Core Retail Sales m/m
8:30 am USD Unemployment Claims
Friday, June 23
8:30 am CAD CPI m/m
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar