Canadian Dollar Gains Against Most Peers Ahead of BoC Interest Rate Decision

The Canadian dollar traded marginally lower against the US dollar and other major peers on Tuesday, as crude oil prices continued to head higher due to growing concerns that global supply might be disrupted. The loonie was lower today as traders anticipated a monetary policy decision from the Bank of Canada tomorrow.

Prices of crude oil gained about 10% in the past two weeks, as supply disruptions drove the value of crude higher. Production in Sharara, the biggest oil field in Libya, was halted again after a single week of reopening after the main pipeline between the oil field and the Zawiya refinery stopped operating.

This added to worries of geopolitical factors that could disrupt crude supply, which were stoked by comments from US President Donald Trump during his meeting which Chinese President Xi Jinping. Trump said that he requested an airstrike against a number of targets in Syria in response to a recent deadly chemical attack that claimed the lives of 80 Syrian civilians.

Oil supplies might be further limited, as reports emerged today that Russia will soon start talks of possibly extending an agreement that was made with the Organization of the Petroleum Exporting Countries last year. An extension to the agreement, which limited crude production and helped stabilizing oil prices, is likely to support the loonie.

Looking ahead, investors are anticipating the Bank of Canada’s interest rate decision at 14:00 GMT on Wednesday. Expectations are that the Canadian central bank will keep its benchmark interest rate unchanged at 0.50%. Bank of Canada Governor Stephen Poloz will speak after the announcement of the decision and might offer hints of the future road for Canadian monetary policy.

USD/CAD traded at 1.3333 as of 19:00 GMT on Tuesday, from 1.3313 at 12:35 GMT, the pair’s lowest level since April 3. USD/CAD began trading today at 1.3318. EUR/CAD was at 1.4139, after touching 1.4090 at 07:05 GMT, the weakest point for the pair since March 3, after starting the day at 1.4113.

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