USD/CAD: Crude oil plays a more significant role - NBF
According to National Bank of Canada analyst Krishen Rangasamy, the influence of crude oil prices in the Loonie has risen while the impact of interest rate spreads is waning.
“While the case for further monetary policy tightening by the Bank of Canada has become weaker amid a larger-than-expected output gap, slowing credit growth, and enhanced uncertainties with regards to the global economy, that’s not to say the Canadian dollar will repeat last year’s disastrous performance (when it lost 8% versus USD).”
“The influence of Canada-U.S. interest rate spreads on the loonie seems to be waning, in sharp contrast with oil which is reasserting itself as the main driver of the Canadian currency. Thanks in part to supply cuts both at home and abroad and the U.S. dollar’s weakness, oil prices are now rising as we had expected and pushing USDCAD towards our end-of-Q1 target of 1.30.”