Home Daily Commentaries CAD seeing retreat on softer oil prices

CAD seeing retreat on softer oil prices

Friday 18 November, 2022

Daily Currency Update

A drop in the short-term demand for oil is having impact on the CAD this morning.  After getting back over the psychologically important $90 a barrel level for WTI, we are back down to under $80 a barrel for the first time since September. Futures markets are trading in the pre-market though so this may help the Canadian take back some of the ground it lost.

Key Movers

The USD is coming up off the lows we have seen earlier this week as lack of data has markets focused on recent speeches from Fed Governors. Hopes are that they will give indication to what the next rate announcement might look like.  For now, expectations remain strong that we will see a lower than recent 50-point hike on December 14th.  Helping the USD currently as well are dropping commodity prices.  Gold and other metals are down and WTI Oil which hit the $90 a barrel mark just last week is back down to $79 this morning. This is the first time it has been under $80 a barrel since September. In other news the UK Chancellor offered the latest budget update. A £55billion package of tax increases and spending cuts highlighted what was an austere budget offering. While many of the austerity measures won’t be introduced until after the election in 2024, they offer little incentive to suggest fiscal spending will help revitalize a stagnant UK economy. The budget papers forecast a 1.4% contraction in GDP, while inflation is expected to remain elevated and above 7% through the next 12 months. With markets largely anticipating the dour budget offering, the GBP is little changed slipping slightly but maintaining a relatively narrow handle. While there is scope for the GBP to find and extend short term gains, the bleak economic outlook should continue to suppress larger moves, particularly against key major crosses. Our attentions turn now to Japanese CPI data and commentary from ECB President Christine Lagarde. With little headline news flow on hand we are closely monitoring demand for risk as a key driver into the weekly close.

Expected Ranges

  • EUR/CAD: 1.3789 - 1.3871 ▲
  • GBP/CAD: 1.5720 - 1.5922 ▲
  • AUD/CAD: 0.8873 - 0.8973 ▼
  • USD/CAD: 1.3303 - 1.3389 ▲