USD/CAD losses extend

A large draw in US oil inventories today has boosted crude oil prices close to $50 per barrel. WTI is up $1.09 to $49.71, which is the highest since October.

The rally is on the heels of a 5.1 million barrel draw in the API storage report and a 4.2mb draw in official numbers from the EIA. Immediately after the EIA report, crude fell nearly $1 on profit taking and worries about a gasoline draw but prices shot higher once again into the floor close. As a result, USD/CAD fell to a low of 1.3026, down more than a full cent since the start of North American trading.

The other driver was the Bank of Canada statement. There was speculation it would include downgraded growth and inflation hints or a slightly dovish bias but the BOC played it right down the middle. They conceded weaker growth because of the forest fires in Alberta but are expecting a quick rebound later in the year. One overlooked part of the statement might be the expressions of disappointment about business investment but the market is focused elsewhere.

Breakdown near?

Technically, USD/CAD is back testing the break of the April 15 and May 9 highs. That support zone will break if oil rips through $50 but one interesting tidbit in the BOC statement is a hint of skepticism on oil prices. The next zone of support is near 1.2800.

The BOC noted crude prices were higher "in part because of short-term supply disruptions". With Alberta starting to get back online and other production problems around the world in various states of repair, they may believe $50 oil won't last.