The USD/CAD pair continues falling, shedding around 100 pips from the start of the week. The barrel of crude oil (West Texas Intermediate) for March delivery held close to USD 56, and crude remained at a three-month high despite all the current global growth concerns. Furthermore, Saudi Arabia’s production cuts continue to keep a floor under the price.
This morning, the Loonie is one of the best performers amid a consolidation of US dollar losses from yesterday. All the major currencies - Euro, Pound, Yen, Aussie and Kiwi dollar - are losing slightly this morning. The exception is the Loonie, which is appreciating around 0.22 percent against the US dollar this morning. The reason: the price of crude.
Another catalyst, aside from crude, was the US asking China to keep its currency stable. This should be taken with caution however. Guan Tao, former Director General of Balance of Payments at the State Administration of Foreign Exchange in China said, "…any promise would be unlikely to be very specific. It's more likely to resemble a framework as the problems won't have specific solutions in such a short period." He added, "…a discussion of Yuan exchange rate stability should not only impose responsibilities on China, but also require cooperation from the US, such as by reducing trade frictions, slowing the pace of Fed interest rate hikes, and maintaining a stable US dollar."
Technically speaking, the USD/CAD pair might fall to around 1.3133 - 1.3150 this week if the “risk on” environment continues.