Loonie Hits Three-Week Low As Oil Drops

People working on currency exchange Ottawa and across the country saw the Canadian dollar, or the loonie, hit the lowest value it’s been at for three-weeks when compared to the USD on the session at the 28th May, the prices dropping in anticipation of the Bank of Canada’s decision regarding interest rates, to be made by the end of the month.

At 9:02AM (EDT)/13:02 (GMT), the loonie’s trade value dropped to $1.2989 to the greenback or 76.99 US cents, a decrease of 0.1%, which is the weakest numbers that currency exchange Ottawa have seen the currency set since May 8, which ended with the loonie’s trade value sitting at $1.2996.

On the 25th of May, Friday, the loonie experienced the biggest drop in over two months, thanks to the price of oil per barrel taking a dive. This is because of the fact that oil is one of Canada’s key exports. The decline then continued a few days following that, on the 28th of May, when Saudi Arabia and Russia said that they are considering increasing supplies as the US’s production doesn’t show any signs of slowing down its growth. US crude prices also went down by 2.1%, sitting at $66.45/barrel.

The US$ upped in value in comparison to a wide range of major currencies following Italy’s president setting the country on the road for elections, applying pressure to the euro. Foreign trading values were also low thanks to the holidays that passed in the US and in Britain.

A poll from Reuters have been looking towards the Bank of Canada, forecasting that it’ll be holding interest rates steady as the current situation in Canada, with uncertain trade policy and indebted consumers, is one that demands caution, but the second half of 2018 might see increases thanks firmer prices and wage inflation.

Additionally, investors will also study the expansion of the Trans Mountain pipeline. As Kinder Morgan Canada Ltd’s hard deadline for aborting the expansion grows near, there’s doubt in investors, contractors and the government about saving the C$7.4 billion project.

Speculators are already putting bets on the loonie, with data from the US Commodity Futures Trading Commission and analysis from Reuters saying that net short positions had gone up from 23,656 contracts to 26,212.

Meanwhile, Canadian government bond price went up, alongside German Bunds. The two went up by 6.5 cents over the past two years, an increase of 1.963%.