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Forex News: Canadian Dollar Drops On Falling Oil Prices

Canadian Dollar Drops On Falling Oil Prices

03/27/2017 - 08:00:00 (RTTNews)

(RTTNews) - The Canadian dollar drifted lower against its major counterparts in the European session on Monday, as oil prices fell on indications of increased drilling activity in the U.S. and as the OPEC put off a decision to extend historic production cuts to balance oil market.

Crude for May delivery declined $0.38 to $47.59 per barrel.

Data from Baker Hughes showed that the oil rig count rose by 21 to 652 in the week ended March 17, which was its highest level since September 2015. Signs of growing shale output undermines the attempts by the OPEC to eliminate the supply glut.

The meeting of OPEC and non-OPEC oil producing nations over the weekend agreed to review the oil market conditions and meet again in April regarding an extension of the output deal. This was an abrupt change from earlier draft of the statement which reported a "high level of conformity and recommends six-month extension."

Further weighing on the currency on the currency was risk aversion, as President Donald Trump's failure on healthcare reform triggered concerns about the prospects for his plans to use fiscal stimulus to boost growth.

The loonie showed mixed performance in the Asian session. While the loonie rose against the aussie and the greenback, it held steady against the euro. Against the yen, it declined.

The loonie slipped to 1.4504 against euro, a level unseen since November 2016. The loonie is likely to find support around the 1.46 mark.

Survey data from Ifo institute showed that German business sentiment improved in March.

The business confidence index rose to 112.3 in March from 111.1 in February. Economists had forecast the indicator to fall to 110.8.

The loonie eased to 1.0190 against the aussie and 1.3350 against the greenback, from its early near 2-week high of 1.0155 and a 4-day high of 1.3321, respectively. On the downside, the loonie may locate support around 1.03 against the aussie and 1.345 against the greenback.

The loonie remained lower against the yen with the pair trading at 82.66, after falling to more than a 4-month low of 82.56 early in the session. The next possible support for the loonie-yen pair is seen around the 81.00 level.

The summary of opinions from the monetary policy meeting showed that Bank of Japan board members viewed that the bank should not rush to action and it should pursue monetary easing under the current framework with patience.

To achieve the price stability target, it is important to bring the economy onto a self-sustaining growth path, members said at the meeting held on March 15 and 16.

Looking ahead, Federal Reserve Bank of Chicago President Charles Evans and European Central Bank Chief Economist Peter Praet are expected to speak about the current economic conditions and monetary policy at the Global Interdependence Center in Madrid at 1:15 pm ET.

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