Oil weakness weighing on the Canadian dollar
The non-stop rise in US oil inventories is confounding analysts who say the numbers don’t line up with what’s happening at refineries.
In any case, the market isn’t believing what the analysts say and WTI is at a session low, down $2.37 to $50.85. It’s another 4.5% for oil as the rally from late last week is almost erased. The low on June 5 was $50.60 and that’s the key support level.
As for the Canadian dollar, it’s finally starting to feel the weight of oil. It’s impressively held up in the past month as the Fed pivots towards cutting and Canadian economic data outperforms. I think $50 is a level where Canadian producers start to sweat. Equity prices in the space are already pricing in Armageddon so I don’t think there’s much to lose there but if any of them need capital, I don’t know where it’s going to come from at this point.
As for the Canadian dollar, there is a massive divergence between the USD/CAD chart and oil. Today’s gain looks like a bump in the road, although you could argue there is a double bottom forming.