Canadian Dollar Follows Crude Oil to Upside, Rally in Danger

The Canadian dollar rallied against most of major peers on Monday, tracking the rise of crude oil prices. There is a decent probability, though, that the crude’s rally will fizzle soon, dragging the loonie down.

Crude oil futures demonstrated significant gains on Monday. Considering that the Canadian currency often follows the moves of the commodity, it is not surprising to see the loonie rising on Monday as well. The problem is that the rally of oil was caused by optimism for the upcoming meeting of the Organization of Petroleum Exporting Countries, and there are many reasons to doubt that the OPEC will be able to agree on oil production cut necessary to support prices for the commodity. And as an agreement has already been priced in, without at least some sort of a deal prices are likely to tank, pulling the Canadian dollar down along with them.

Even disregarding the OPEC meeting on Wednesday, this week should be important for the loonie as GDP and employment reports will be released on Wednesday and Friday respectively. US employment data should have noticeable impact on the currency markets, thus influencing the Canadian currency as well.

USD/CAD edged down from 1.3500 to 1.3412 as of 21:31 GMT today. EUR/CAD dropped from 1.4318 to 1.4225. CAD/CHF jumped 1.1% from 0.7474 to 0.7555.

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