No love for oil as Canadian dollar hits four-week low

USD/CAD rises to highest since March 28

Yesterday’s fall in USD/CAD has been reversed as the pair jumps more than 50 pips to 1.3019. The latest leg of the rally hit stops above the April high of 1.3403.

It’s part of a quick, broad rally in the US dollar that pushed the dollar index to a five-day high.

The strength in USD/CAD is a bit of a puzzle. Oil is near a six-month high, although its 50-cents from the intraday high. Part of the story might be jitters about the BOC tomorrow. Flows must be part of the story but this is time of month when we generally see CAD-positive oil settlement flows.

What is worth worrying about is China. Reports yesterday about China paring back stimulus hit Shanghai stocks hard on Monday and is something to continue to worry about. The Shanghai Comp was down 0.5% today in more stable trading but this might be a delayed reaction to the potential for less China demand.

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