WTI crude suddenly down another 2%
Oil looked like it was taking a breather today, trading flat for most of the day. But in the last two hours, the sellers have driven crude to fresh lows, down $0.86 to $48.33.
It's not only that US oil has been falling, it's that the Canadian benchmark -- Western Canada Select -- is falling even faster. A month ago, it was selling at a $7 discount to WTI, that's ballooned to $16. It means that Canadian oil is at $32/barrel.
WTI crude oil
The last time USDCAD was this high was in the depths of the crisis and we're on the precipice of breaking that high.
So what's different now? If you look at Canada, not much. The economy is in a mild recession, commodity prices are tumbling and interest rates are going to zero.
The difference is in the US. Six years ago the US was in it with Canada. Housing prices there were collapsing and the economy imploding. This time the US is accelerating.
USD/CAD has been restrained by offers ahead of the crisis high of 1.3065 and a solid Canadian retail sales report held the pair down today. But it won't last.
Look for near-term CAD selling, right across the board.
USDCAD weekly -- about to break
If you ask Canadians how they feel about the Canadian dollar, you get the same answer. They're worried. Canadians aren't ultra-sensitive to the currency but then it's suddenly front-page news and a sort of national self-loathing begins. It's the same with companies as they suddenly hit the panic button and hedge.
If you want a sense of how worried people are. I spoke with the CBC yesterday about the loonie. Look how many comments are on the story.
