- USD/CAD accelerates its downtrend to 1.3230 lows.
- The Canadian dollar appreciates as oil prices bounce up.
The US dollar is falling sharply against its Canadian counterpart on Monday, accelerating its reversal from last week’s top near 1.3400 reaching intra-day lows at 1.3230 so far.
Canadian dollar appreciates as oil prices bounce up
The loonie has been unfazed by the broad-based US dollar strength with the USD/CAD depreciating for the second consecutive day. The 2% rebound on oil prices and the unwinding of dollar-long positions ahead of the US election day are weighing on the USD.
Beyond that, market sentiment has improved somewhat on Monday after the strong risk aversion sentiment seen last week. The main equity indexes are posting substantial advances and oil prices have appreciated more than $2, as the positive Chinese factory data and US manufacturing activity have offset concerns about the coronavirus spread.
On a somewhat longer perspective, however, crude prices remain at one-month lows after having depreciated more than 10% over the last two weeks amid fears that the second wave of lockdowns will sink global demand. This is expected to be a burden for the Canadian dollar.
WTI runs higher on OPEC expectations
The black gold rallies back as investors bank on OPEC delaying the taper.
COVID-19 and the US elections remain the key drivers.
The price of WTI is bid despite the demand side risk of yet another lockdown in Europe as prospects of OPEC kick in.
At the time of writing, WTI is trading at $36.91 and has travelled between a low of $33.67 and a high of $37.08.
Crude oil prices had been heavily on the back foot yet considering yet another European region locked down, with England joining other Western European nations in imposing mobility controls to combat the contagion.
The market had also to contend with Libyan production coming back online and no confirmations from OPEC+ of any planned tapering.
Meanwhile, policy uncertainty is also weighing on prices ahead of the US election, considering its potential implications on global oil supply.
However, oil futures at the start of this week posted their first gain in four sessions on the expectations that OPEC+ will postpone plans to curb production cuts.
US presidential elections are also a feature in the market as the anticipation of a Blue wave supports the demand side in the longer run.
OPEC+ had planned to reduce its production cut targets from 7.7 million barrels a day to about 5.8 million barrels a day at the start of the new year.
Thee are wires that report that Russian oil companies are in discussions with government authorities over a possible delay to its plans to increase its oil production from the start of 2021.
Reuters reported Monday, citing Interfax, that the Russian Energy Minister planned to talk with domestic oil companies about the OPEC+ oil output agreement.