The Canadian dollar is trading relatively sideways on Tuesday as the price of crude oil crashes. The loonie, which slipped to a four-month low early in the trading day, is attempting to snap its four-session losing streak. Without any major Canadian events, investors may not have an appetite for the currency.
On Tuesday, crude oil prices crashed to their lowest levels since the start of December, tumbling more than 6%. The plunge comes as President Donald Trump warned against the Organization for Petroleum Exporting Countries (OPEC) and Saudi Arabia slashing their production volumes. He tweeted that âoil prices should be much lower based on supply.â
OPEC revised its 2019 forecast for demand growth downwards for the fourth time since July. The cartel noted that output from non-OPEC members will outpace demand growth next year. This is causing OPEC officials to consider new strategies to balance the global market, including a supply cut of around one million barrels per day (bpd).
The Trump administration is pressuring Saudi Arabia to boost production before the June meeting. The White House believes it can depend on Riyadh to offset the impact of renewed sanctions on Iran.
December West Texas Intermediate (WTI) crude futures cratered $3.66, or 6.11%, to $56.24 a barrel on the New York Mercantile Exchange. Oil prices have plummeted 22% this month, wiping away all of their 2018 gains, bringing year-to-date losses to 2.6%.
Meanwhile, without any important data to come out, traders will look for direction in the greenback as the US consumer price index (CPI) and spending reports will be published on Wednesday.
Rate hikes have already ostensibly been penciled in with the Bank of Canada (BOC) expected to raise interest rates at next monthâs policy meeting. The BOC has already said it will institute gradual rate hikes next year, mirroring the Federal Reserveâs 2019 plans.
The USD/CAD currency pair rose 0.1% to 1.3263, from an opening of 1.3248, at 18:04 GMT on Tuesday. The EUR/CAD surged 0.42% to 1.4923, from an opening of 1.4858.
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