TheÂ Canadian dollar rallied toÂ aÂ six-week high onÂ Thursday after theÂ US government reported aÂ bigger-than-expected decline inÂ crude oil inventories. TheÂ loonie may also find direction inÂ several key US economic reports, asÂ well asÂ President Donald Trumpâs recent meeting with European Union (EU) Commission President Jean-Claude Juncker.
According toÂ theÂ US Energy Information Administration (EIA), US crude stockpiles fell byÂ 6.1 million barrels forÂ theÂ week ending July 20. Gasoline inventories shed 2.3 million barrels, distillate supplies tumbled 100,000 barrels, andÂ US output topped 11 million barrels per day (bpd).
InÂ recent days, theÂ loonie has found support inÂ higher energy prices. This has not been theÂ case throughout theÂ 40% rally over theÂ last 12 months. US andÂ Brent crude futures have been hovering around theÂ key $70 threshold.
OnÂ theÂ domestic economy front, there are no data reports scheduled toÂ be released forÂ theÂ remainder ofÂ theÂ week. But Canadian investors will be looking south ofÂ theÂ border forÂ several releases, including core durable goods orders, which are forecast toÂ advance 0.5%. Traders will also be waiting forÂ Fridayâs Advance GDP andÂ UoM Consumer Sentiment numbers.
President Trump met with Juncker onÂ Wednesday toÂ find aÂ conclusion toÂ theÂ EU-US trade spat. TheÂ meeting has been deemed aÂ success because both sides agreed toÂ postpone any additional tariffs asÂ negotiations continue, which many say was aÂ major concession byÂ Trump. Although tariffs onÂ European aluminum andÂ steel remain intact, theÂ Trump administration concurred that it will take another look atÂ these measures asÂ theÂ EU imports more soybeans.
Before his meeting, Trump tweeted:
TheÂ European Union is coming toÂ Washington tomorrow toÂ negotiate aÂ deal onÂ Trade. IÂ have anÂ idea forÂ them. Both theÂ U.S. andÂ theÂ E.U. drop all Tariffs, Barriers, andÂ Subsidies! That would finally be called Free Market andÂ Fair Trade! Hope they do it, we are readyÂ â but they wonât!
This weekâs development had some inÂ Canada wondering if theÂ same type ofÂ deal could be established soon pertaining toÂ theÂ North American Free Trade Agreement (NAFTA). But these hopes quickly faded after President Trump confirmed he was close toÂ aÂ bilateral deal with Mexico, completely ignoring Canada andÂ their trade disputes.
TheÂ US Dollar Index surged 0.20% toÂ 94.42.
TheÂ USD/CAD currency pair rose 0.03% toÂ 1.3051 from anÂ opening ofÂ 1.3045. TheÂ EUR/CAD plunged 0.24% toÂ 1.5265 from anÂ opening ofÂ 1.5300.
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