CAD falls with oil prices as no OPEC agreement yet announced

The Canadian Dollar spent most of Tuesday dragged down by falling oil prices and the same pattern of trading has continued overnight. NYMEX Crude reached a 2017 high of $58.82 last Friday, fell Monday to $58.15, Tuesday to $57.54 and after a bounce in yesterday afternoon’s session, is this morning back testing the lows.

USD/CAD has risen (weaker CAD) to a four-week high of 1.2846 and on the day the Canadian Dollar is the weakest of all the major currencies we follow here. Ahead of the OPEC meeting, it is reported that Saudi Arabia and Russia (which is not an OPEC member) are trying to reach agreement on extending production cuts into 2018.

An agreement first struck a year ago and set to expire in March was aimed at reducing a global oversupply of oil caused in part by US producers and it is said the Saudis want to extend this until the end of next year. Moscow, however, might prefer a shorter agreement which would allow it to increase output if prices rise, rather than see all the benefits go to North American shale producers. The Saudi oil minister is quoted on newswires saying it was “too early to talk about a disagreement” and said “a solution” will be reached during talks Wednesday and Thursday in Vienna, where OPEC is based.

With few, if any, monetary policy clues in Tuesday’s FSR and with the week’s main economic data in Canada (GDP and the employment report) not out until Friday, the CAD will most likely once again be driven by oil prices and headlines from Vienna.