CAD Falls as Crude Oil Prices Crash
The Canadian dollar dropped in the FX market as crude oil prices down trended along with the Dow Jones and S&P 500. Panic began following headlines from the key oil producers. OPEC and Russia failed to reach a deal prolonging their output cap scheme, aggravating the economic
The Dow Jones and S&P 500 closed -0.98% and -1.71% to the downside on Friday.
The dollar dived to the mid-101-yen level, its lowest since November 2016. The euro was at $1.1397- $1398 and 116.89 yen-116.91 yen against $1.1275- $1285. Moreover, 118.91 yen- 119.01 yen in New York, $1.1234-$1235 and 118.85 yen-89 yen in Tokyo on Friday.
The Swiss franc and the euro outpaced gains in the British pound, while AUD and NZD declined.
Trump considers economic stimulus to help businesses and offset the impacts of coronavirus. Trump Senior Economic Adviser Larry Kudlow said, some of the sectors might need temporary assistance.
U.S. President Donald Trump said he doesn’t know if the stimulus is needed in fiscal matters. He pressured the Federal Reserve to act instead. Trump signed a $7.8b package to help funding.
The White House is still working on various ideas and stimulus plans are still at the brainstorming stage
Other Currency Movement
CAD sank to its worst while the Japanese yen gained. Treasuries have gone down as investors piled into the safety of government bonds. The yen outperformed while financial markets plunged with the worst one-day crash in crude prices.
This development fuels the panic from the escalation of the virus outbreak. The 10-year Treasury fell below 0.5% and trading stopped as US equity futures crashed. Stocks in Asia are also in red.
In forex trading, China, Australia’s largest trading partner, has posted their largest trade deficit in 16 years. They are at 4% decline in imports, while exports are down to 17.2 percent
Given the Canadian economy heavily relies on oil exports, declining WTI will have an inverse impact on the USD/CAD pair. Moreover, the black gold recently dropped to a four-year low around $30.60 amid expectations of this widening demand-supply gap.
CAD fell 1.6% to 1.3640 per dollar, its lowest since 2017. With that, the frequently oil-linked Canadian dollar proved weakest in the pack at this time.
This oil price fall also triggered selloffs in oil-exporter’s currencies. The COVID-19 updates and oil-price dynamics will continue to have a significant impact on markets on the fx boards.
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