img CDN
img AUS
img NZ
img US
Call us now: 1.844.363.7297
imgOnline Dealing Login

Loonie Gains on More Hope of OPEC Cut

Published November 21, 2016
  • Oil prices are rising to start the week as rumours that OPEC is inching closer to a production deal continue to build
  • The Loonie has benefited as a result, with USDCAD trading in the mid 1.3400's after closing just above 1.3500 last week
  • WTI is up 1.6% to $46.60 a barrel after trading to a 3-month low just above $42 only seven days ago
  • The current framework for the deal hinges on Iran agreeing to freeze production at approximately 4M barrels a day (slightly higher than current levels) which seems plausible following optimistic comments from the Iranian oil minister on the weekend
  • Iraq is the next major hurdle with discussions on production limits being met with stiff opposition from Iraqi officials
  • First, Iraq is citing the need to maintain oil revenues in order to fund the fight against ISIS
  • Second, as stipulated under contract, Iraq would have to compensate international oil companies for limits placed on their production
  • These two rather salient points of contention will likely mean that negotiations will come right down to the wire and, despite the positive overtures over the weekend, a deal still looks like a 50-50 proposition
  • The economic calendar is rather robust ahead of US Thanksgiving on Thursday
  • Canada reports wholesale trade today and retail sales data Tuesday
  • Meanwhile, the US reports existing home sales on Tuesday and durable goods and consumer sentiment on Wednesday (Chart 3)
  • USDCAD continues to exhibit bullish divergence on the weekly chart with near term support and resistance for USD coming in at 1.34 and 1.3575 respectively

Charts: (1) USDCAD bias to the topside. (2) USD Index breaks out. (3) Economic Calendar.