It could be the Canadian dollar’s often intimate correlations to oil prices that keep a lid on the currency over the near-term.
Otraders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices. Rig counts have recently ticked higher and with credit and earnings issues improving for some U.S. shale drillers, those companies may seize the opportunity to exploit higher pricing in the near-term.
“One of the barriers to further Canadian dollar gains is a gap in monetary policy. The Federal Reserve is expected raise rates, while the Bank of Canada is seen on hold. Investors should continue to take advantage of the carry trade, widening the spread between the sovereign two-year yields and pressuring the currency,” according to Bloomberg.
For more information on the crude oil market, visit our oil category.