USD/CAD Canadian Dollar Falls As Oil Price Tumbles With Persistent Glut

 | Aug 23, 2016 01:29AM ET

The Canadian dollar depreciated versus its U.S. counterpart in the first trading session of the week after the price of energy fell following reports of higher exports and higher number of rigs. The Canadian dollar had touched post-Brexit highs last week on the back of USD weakness as comments from the U.S. Federal Reserve have been mixed about monetary policy. The market is waiting for Friday’s speech by Fed Chair Janet Yellen looking for insights into the timing of the next interest rate hike. With San Francisco President John Williams putting on the table a possible change to the central bank’s inflation target the possibility of the Fed not changing its benchmark rate for 2016 gained traction. Comments from other Fed members offset some of the dovish view but the fact remains that for all the hawkish Fed rhetoric for some members, its actions and internal debates are reducing the possibility of a rate hike in September.h2 Loonie Lower Despite Canadian Wholesale Rise/h2

This week will be light for economic indicators in Canada. The release of the Canadian wholesale sales showed a rise of 0.7 percent. The positive news was taken into context as wholesale sales account for about 5 percent of GDP. The fall in the price of energy soon took the price of the CAD to weekly lows as reports showed a rise in production output as well as a higher rig count in the U.S. The reality of a supply glut drove prices lower and it will take more than producer promises of an oil output freeze to again challenge the $50 level. The Organization of the Petroleum Exporting Countries (OPEC) is anticipated to discuss the output freeze in the upcoming meeting in late September with non-OPEC members interested in joining, but for the time being not committing to anything.

h2 USD Bounced Back Ahead of Jackson Hole/h2