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.
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.