Loonie Sinks As Crude Oil Trades at 18-Year Lows Despite Supply Cuts

The Canadian dollar today extended its losing streak against the US dollar for the second day in a row despite yesterday’s hawkish rate decision by the Bank of Canada. The USD/CAD currency pair surged higher as the loonie remained under pressure due to falling crude oil prices despite recent output cust by OPEC+ and some US producers.
The USD/CAD currency pair today rallied from a low of 1.4063 in the early American session to a high of 1.4182 a few hours later but was off these highs at the time of writing.
The loonie was under pressure today, given the drop in global crude oil prices as tracked by the West Texas Intermediate, which hit a low of 19.68 earlier today. Investors are concerned about the massive pileup of oil supplies globally, as reported by the International Energy Agency (IEA) amid subdued demand due to the coronavirus pandemic. Bank of Canada’s decision to keep interest rates at 0.25% at yesterday’s monetary policy meeting provided support to the loonie. However, this was not enough given the vital role that oil exports play in Canada’s economy.
The release of Canada’s employment change report for March by ADP boosted the loonie briefly despite the country shedding 177,300 jobs. Canada’s manufacturing sales report for February released by Statistics Canada also beat consensus estimates, but the effects were short-lived.
The currency pair’s future performance is likely to be affected by crude oil prices and BoC Governor Stephen Poloz’s speech.
The USD/CAD currency pair was trading at 1.4116 as at 18:57 GMT having rallied from a low of 1.4063. The CAD/JPY currency pair was trading at 76.25 having dropped from a high of 76.53.

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