The USD/CAD price is up by 0.55% as traders react to low crude oil price ahead of the Bank of Canada (BOC) interest rate decision. The pair is trading at 1.3250, which is the highest it has been since October 15.
Crude oil price slides
Canada is the fourth-biggest crude oil producer after the United States, Saudi Arabia, and Russia. The country produces more than 5.9 million barrels every day. It consumes about 2.2 million barrels every day and exports the rest. Also, the sector employs millions of people directly and indirectly.
These factors make the Canadian dollar highly-sensitive to global crude oil prices. And today, the price of oil is in a sharp downward trend. West Texas Intermediate (WTI) has fallen by 4.65% to $37.75. On the other hand, Brent, the international benchmark, has dropped by 3.75% to $40. In total, the price has dropped by more than ~10% in the past two weeks.
This decline is because of the rising number of Covid-19 cases around the world. In the United States, the number of infections has risen by more than 500k in the past week. Similarly, the number has risen in more countries, including Canada, Norway, Germany, and France.
The impact of this is that demand will continue falling as countries implement another round of restrictions. Also, air transport, which is a major consumer of oil will take time to recover since countries like Norway have started mandating quarantines. At the same time, OPEC and other producers have not signalled whether they will slash production.
Bank of Canada rate decision
The USD/CAD price is rising
