After a small short-term correction, the pair USD / CAD still reached its one-and-a-half-year highs, finally consolidating itself within the 35th figure. The Canadian is under pressure from the oil market, which continues to fall in price actively. At the moment, a barrel of Brent crude is already trading around $ 52, the last time the price was such a low last September. WTI crude oil shows a similar trend, dropping to $ 45. Traders of the USD / CAD pair are obviously nervous, especially on the eve of a long New Year's weekend, when low liquidity contributes to sharp price fluctuations.
In general, the problems of the Canadian currency can be divided into two parts. First, this is the devaluation of "black gold", and secondly, the slowdown of key indicators of the Canadian economy. In fact, the Canadian dollar was without any support. Even the dovish Fed meeting had a temporary impact on the pair. The American regulator announced a rate hike next year, while the Bank of Canada took a more cautious position after a fivefold increase, noticeably softening its rhetoric.
The Canadian dollar reacts quite sharply to the current situation, which is also aggravated by internal factors. Thus, in Canada, there is a shortage of pipeline infrastructure, which is why the delivery of oil produced in Alberta to the NFZ and for export is stalled. Let me remind you that Alberta is the main oil-producing region of Canada, where they recently decided to reduce oil production by almost 10% in order to reduce the excess oil reserves. This measure will be effective from January until all stocks (35 million barrels) are sold. However, due to the lack of pipeline capacity, this task will be difficult to accomplish.
Such perspectives so alarmed Canadians that they came to the protests, demanding that the authorities intervene. As a result, members of the Canadian government agreed to help oil companies by giving them loans of 1.6 billion Canadian dollars, which will be issued through state credit agencies. According to officials, these funds will be enough to purchase new equipment although some experts doubt it.
Despite the measures taken, representatives of the Canadian regulator have already expressed concern that the profitability of the Canadian oil sector has been declining lately, both due to external factors and due to internal factors. Given the continuing decline in the oil market, it can be assumed that the members of the Central Bank will continue to soften their rhetoric. By the way, after the last Fed meeting in the market, they started talking about the fact that the Bank of Canada will not be in a hurry with tightening monetary policy. A month ago, the probability of a January increase was quite large but now, the market has looked more soberly at the prospects for next year. Some experts have even suggested that the Central Bank of Canada will take a pause until 2020, or at least until the end of the next one. In their opinion, the problem is not only in low oil prices but also in reducing real estate investments.
The retail sales index also did not reach the forecast values, being in the "red zone". The situation was somewhat smoothed over by the Canadian GDP growth report. After falling in October, the indicator showed a positive trend (+ 0.3% m / m and 2.2% y / y). However, this fact is unlikely to deploy a pair of USD / CAD. Traders are fully focused on the oil market, projecting the dynamics of oil prices on the prospects of monetary policy.
