Both the Norwegian krone and the CAD gained ground yesterday, with the latter rising 0.77% on the day. Although pinpointing an exact cause would be tricky, some pundits attribute the loonie's rise to the slight rally in crude oil prices, while others see it as a correction after an overly fast drop that brought our dollar down by close to 2% last week. We see this situation as an opportunity for USD buyers, given that crude prices have certainly not finished their roller coaster ride and this variable will remain front and centre for some time to come. Already this morning, the loonie has given up a substantial portion of yesterday's gains, confirming that market volatility is high.
According to New York Fed Chair William Dudley, a drop of $20/barrel in crude prices is the equivalent of a $670 billion transfer of wealth. It will be interesting to see how central banks react if the decline in oil prices persists in the long term. For the moment, the Reserve Bank of Australia has opted to keep its key rate unchanged for a 16th month in a row. Stéphane Goulet
- Range of the day: 1.1310 - 1.1440