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Canadian Dollar Falls on US Equities Rally, Later Rises With Oil Prices

June 9, 2020 at 19:27 by Simon Mugo

All the Canadian dollar bills denominations

The Canadian dollar today lost ground against the US dollar amid investor optimism about the unprecedented V-shaped stock market recovery going on in the US. The USD/CAD pair rallied higher as traders remained sceptical that the oil output cuts extended by the OPEC cartel and its allies would stabilise oil prices.

The USD/CAD currency pair today rallied from an opening low of 1.3359 to a high of 1.3487 in the early European session before retracing most of its gains to trade near its daily lows at the time of writing.

The commodity-linked loonie lost ground against the US dollar earlier today triggering the pair’s rally as investors bid up the greenback. The V-shaped recovery in the US equity markets evidenced by the NASDAQ closing at new all-time highs boosted investor confidence in the US dollar. Investors seemed unconvinced that the extension of the oil production cuts by OPEC and its allies would reduce the global crude oil oversupply. The alliance announced that the historic cuts would be extended by a month with Saudi Arabia insisting that all signatories have to comply with the production cuts.

OPEC+ is trying to shore up crude oil prices, which crashed in April, due to the price war between Russia and Saudi Arabia. The recovery in North American oil prices as tracked by the West Texas Intermediate, which hit a high of 39.07 earlier today drove the loonie’s recovery.

The currency pair’s future performance is likely to be affected by crude oil prices and geopolitical events.

The USD/CAD currency pair was trading at 1.3402 as at 19:26 GMT having fallen from a high of 1.3487. The CAD/JPY currency pair was trading at 80.38, having dropped from a high of 81.03.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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