The Canadian dollar is starting today’s session close to where it closed on Friday. Overnight markets were relatively uneventful.
Asia stock markets were mixed. The major Chinese indexes traded higher while Japan’s Nikkei 225 was flat. European bourses are posting small gains, and Wall Street futures are mixed to flat. Oil prices firmed, and gold prices slid.
Oil prices continued the rally that began on August 20 when West Texas Intermediate (WTI) found a bottom at $61.90/barrel. Prices touched $75.29/b overnight, an increase of over 21%. Oil prices are underpinned by the lingering disruption from Gulf of Mexico hurricanes, falling U.S. crude inventories, and bullish outlooks from the International Energy Agency and the Organization of the Petroleum Exporting Countries. Analysts at Goldman Sachs raised their 2021 WTI forecast to $85.00/b from $80.00/b. The prospect for higher oil prices is providing some support to the Canadian dollar.
EURUSD dropped from $1.1727 to $1.1686 due to uncertainty around the German election. Chancellor Angela Merkel retired and wasn’t part of the election.
Her party, led by Amin Latchet, finished second to the Social Democratic Party (SDP) led by Olaf Scholz. Scholz is hoping to cobble together a coalition, and while those negotiations occur, EUR/USD will trade with a negative bias.
GBP/USD rallied on the back of EUR/GBP selling, although gains were limited due to U.K. domestic issues. The U.K. is suffering from a fuel shortage due to a lack of truck drivers, which threatens to hamper the U.K.’s recovery.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians