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Oil Faces Political Pressure from Saudi-Qatar Tensions; USD/CAD Steady Ahead of Upcoming Data

Published June 5, 2017
  • USD/CAD remains just below the 1.3500 mark as the market continues to digest Friday’s employment change and trade balance data from the US and Canada; the likelihood of a US interest rate hike this month now stands at 95.8%
  • The market looks to Purchasing Manager’s Index and Factory Orders out of the US this morning; US & Canadian unemployment data come later this week along with a speech from Bank of Canada Governor Stephen Poloz on Thursday
  • Oil prices are under pressure this morning after Saudi Arabia and other Middle East nations severed diplomatic ties with Qatar; the neighboring nations accused Qatar of supporting terrorism and of backing the agenda of Saudi’s arch-rival, Iran
  • WTI and Brent Crude initially moved higher as worries about supply disruption from the Middle-East began to surface; prices have since fallen
  • Qatar is one of the smallest producers participating in the OPEC supply cut, indicating that this geopolitical spat may have a minimal effect on production and exports from the region
  • Oil prices, however, have already dropped more than 4% in the last week alone and with rising US oil production, this threat to stability in the OPEC region bodes poorly for OPECs plan to raise oil prices by countering the global supply glut with production cuts
  • The pound is up against the US and Canadian dollar after shrugging off a brief overnight dip; global markets reacted to Saturday’s terror attack in London which left seven dead and over 48 injured
  • UK Prime Minister Theresa May adamantly stated that British elections will commence as planned this Thursday June 8 despite these attacks