- The Canadian dollar was appreciated for the weakness of the USD, but the rise attempts remain limited.
- The massive sale of oil prices triggered by the high fire in the Middle East is weighing on the CAD.
- Investors are also cautious to an abrupt increase in inflation that will complicate the monetary policy of the BOC. in
The US dollar retreated against its Canadian counterpart on Monday, since Trump’s announcement on a high fire in the Middle East drove the appetite for the risk. However, the reversal of the torque has been limited above 1,3700, with investors waiting for Canadian inflation figures.
The US dollar is quoted downward in all areas, with the index of the US dollar (DXY) more than 1% below Monday’s maximums. The agreement between Israel and Iran to cease all hostilities has improved the feeling of the market and has made shelter assets, such as the US dollar, fall.
The fall in oil prices is weighing on Cad
However, the Canadian dollar fails to distance itself significantly from Monday’s minimums, affected by a drop of almost 15% in oil prices in the last two days. Oil is the main import of Canada, and the CAD is strongly correlated with crude oil prices.
The hopes of the investors of a high durable fire in the Middle East have relieved concerns about an interruption of the oil supply that had raised prices in recent weeks. The risks that Iran block the Ormuz Strait have also decreased, which has caused a massive sale of more than $ 10 in WTI prices in the last two days. This acts as an obstacle to CAD.
In addition, the operators are also cautious by placing large long positions in CAD before the publication of the Canadian CPI, which is expected for later today. It is expected that consumer inflation has increased in June, which could complicate the monetary policy of the Bank of Canada and increase the pressure on the Loonie.
In the US, all eyes will be placed in the president of the Fed, Powell, whose testimony before Congress will be observed with interest, since the dovish comments of Waller and Bowman in recent days have raised the hopes of a feat of fees in the coming months.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
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