Crude oil dropped 3.4% Monday further to comments from OPEC confirming that Iran had upped its production in February. Tehran appears to want to boost output before agreeing with other OPEC producers on a potential production freeze. We believe that after hitting a three-month high last week, crude-oil prices are due for a downturn.
In other news, the spread between U.S. and Canadian two-year bond yields has been widening since the end of February. Normally such an increase would favour the greenback, which has not been the case for the past few weeks. With declining oil prices and the two-year yield spread, it now appears likely that a correction in the USD/CAD pair to around 1.355 is in the cards. Stay tuned!
At 8:30 this morning, U.S. Retail Sales will be announced and could show a dip of 0.1% due to weak fuel prices.
Markets will no doubt stay calm until the Fed’s key rate announcement tomorrow afternoon.
Have a great day!
Mark Donohue
- Range of the day: 1.3310 – 1.3450