- An uptick in crude oil prices underpins the commodity-linked loonie.
- Markets sentiment remains sour about the lack of progress in the Russia-Ukraine peace negotiations.
- Jonathan Wilkinson said Canada can help improve global energy security by increasing oil and gas exports following Russia’s invasion of Ukraine.
The Canadian dollar trades high against the US dollar during Friday trading session with rising oil prices amidst sour market sentiment and broad USD strength.
An uptick in crude oil prices has favored the commodity-linked loonie and kept a lid on any meaningful upside for the USD/CAD pair. The latest upside in oil prices has roots in the expectations that Europe’s reliance on Russian oil, that restricts the US to take stronger action against Russia, might not be able to solver the supply crunch fears.
Market sentiment remains sour about the lack of progress in the Russia-Ukraine peace negotiations. Besides this, the stoppage of crude exports from Kazakhstan’s Caspian Pipeline Consortium (CPC) terminal underpinned crude oil prices.
Western leaders piled on military and humanitarian aid for Ukraine on Thursday and denounced Moscow’s invasion of its neighbour as “barbarism” as thousands in besieged cities sheltered underground from Russian bombardment.
This week, FOMC members including Fed Chair Jerome Powell, raised the possibility of a 50 bps rate hike at the upcoming policy meeting in May. Increasing Oil prices and the rate hike puts additional pressure on the already high inflation which favors the greenback.
Natural Resources Minister Jonathan Wilkinson said in a statement on Thursday that Canada has capacity to increase oil and gas exports by up to 300,000 barrels per day (bpd) in 2022 to help improve global energy security following Russia’s invasion of Ukraine, .Canada, the world’s fourth-largest crude producer, is keen to help shore up long-term energy security as countries that previously relied on Russian oil and gas look for replacements amid sanctions aimed at punishing Russia.
USD/CAD 4 Hour Chart:
Support: 1.2494 (S1), 1.2464 (S2), 1.2418 (S3).
Resistance: 1.2570 (R1), 1.2616 (R2), 1.2646 (R3).
The focus will remain on geopolitics amid expectations that US President Joe Biden will announce new sanctions targeting Russian politicians, Comments from Bank of Canada’s (BOC) Deputy Governor Toni Gravelle and Fed policymakers to take clues on further direction of the quote. In the meantime, we expect a bearish trend for USD/CAD.
