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Loonie Retraces Losses from Yesterday; Oil Prices Surge on Demand

Publish Date: 
September 13, 2017
  • The BOC has gone from dove to hawk in a very short time. Some believe Canada could close out 2018 with the highest benchmark interest rate among G10 countries and beyond. Governor Poloz and his Bank of Canada colleagues, having cut their key rate during the oil shock, have now moved twice, in July and last week, to bring it back to 1%. Analysts are now raising the possibility of a third hike at the next meeting in October, while others see the central bank moving again in December. Canada’s central bank has moved markedly in tone and action.
  • The loonie weakened slightly against the greenback yesterday, with Canada’s yield advantage moderating as investors pulled back from their most aggressive bets on a hawkish BOC and cautious US Federal Reserve. USD/CAD peaked at 1.2190 yesterday, though it has erased most of its gains this morning, currently hovering around 1.2145.
  • Oil prices rose today after the International Energy Agency said the global oil surplus was starting to shrink due to robust global demand and an output drop from OPEC and other producers. Brent Crude is trading just below $55/barrel and WTI Crude is trading just below $49/barrel. US Crude Oil Inventories come out at 10:30am EST today.
  • Today is a bit louder than yesterday in terms of economic data. The United States released their Producers Price Index this morning, coming in 0.1% under market expectations at 0.2%. Consumer Price Index data will be released tomorrow. Coupled with the PPI today from today, this data will directly impact the US Fed Reserve’s decision on the cost of borrowing for the rest of 2017.

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