Canadian dollar weakens as oil prices fall and US dollar strengthens
2023.11.22 15:35
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The Canadian dollar experienced a decline as prices took a downturn, with West Texas Intermediate (WTI) crude falling below $75 per barrel. This drop in oil prices, a key export for Canada, coincided with a strengthening US dollar, which gained momentum following data that suggested high US interest rates are likely to persist. As a result, the currency pair saw a notable increase, reaching a peak of 1.3765 before experiencing a slight recovery.
Investors are now anticipating the release of Canadian Retail Sales and US Purchasing Managers’ Index (PMI) data this Friday, amid ongoing global economic concerns and market sentiment analysis. The attention is also on the Organization of the Petroleum Exporting Countries (OPEC), as it postponed a crucial meeting on potential production cuts to next week. This delay is attributed to Saudi Arabia’s dissatisfaction with some members not adhering to previously agreed reduced production quotas.
Adding to the market dynamics is the record level of oil production from non-OPEC countries, which fuels expectations of further production cuts by OPEC. These anticipated cuts are seen as an attempt to balance the oil market against the backdrop of demand worries stemming from China.
In the United States, recent labor data revealed that jobless claims fell to a five-week low of 209,000, signaling tight labor market conditions. This development supports the Federal Reserve’s hawkish stance on inflation, as expectations remain above their target at 3.2%. The combination of these factors contributes to the sustained strength of the US dollar against its Canadian counterpart.
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