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Declining Oil Prices Bite Into the Canadian Dollar; USD/CAD Exchange Rate Nears 1.35 For Second Time in 2017
While the Canada's currency briefly traded at 2-month highs towards the end of last week, falling oil prices pushed the Canadian dollar today to its lowest level since March 13th. During the overlap between the New York London Forex trading session on Thursday - at approximately 10:45 a.m. EST - the USD/CAD rate hit a 38-day high of 1.35004.
But by 11:30 a.m., the pair was trading under 1.3460, and the CAD had recouped all of Thursday morning's losses:
Although the Canadian dollar finished on Thursday with a small gain of 0.1 percent against the USD, it still hasn’t recouped losses incurred since the start of the week. In fact, since Tuesday - including today’s small gain - the Canadian dollar has depreciated by more than 1 percent.
And when measured against last Thursday's 2-month high of 1.32239, the CAD has lost close to 1.85 percent of its value.
The CAD sustained its biggest drop on Wednesday of this week, when the U.S. Energy Information Administration (EIA) reported the first buildup of gasoline supplies since February of this year.
News of the gasoline stockpile cause speculators to fear that demand for oil may decline over the next several weeks as refineries taper their oil purchases, said Fox Business.
EIA’s report crashed the price of light crude oil futures by $2.34 to $50.51 a barrel (4.42 percent) in the space of several hours, which pushed Canadian dollar lower by 0.78 percent by the close of Wednesday’s New York currency trading session:
The CAD was also weighted down today as the price of oil remained under continues selling pressure, trading as low as $50.50.
Volatility in the USD/CAD rate is set to spike again on Friday as currency traders are eagerly awaiting the release of the Consumer Price Index (CPI) reading for the month of March. Analysts are forecasting Canada’s CPI for March to increase by 0.4 percent.
CAD banknotes photo by Eric L