The Canadian Dollar has come under fire as its largest trade commodity, oil, fails to provide support to the currency. The price of oil recently spiked which had seen the Canadian Dollar benefit, but as prices begin to ease off a little, the CAD is coming under pressure. Analysts are predicting a dovish outlook for the Canadian Dollar in the near future in order to rectify the situation, which could spell a drag on the currency. Meanwhile, the UK has entered negotiations with the EU over the Brexit withdrawal. The GBP recorded gains over the Euro and the USD heading into the talks and investors are hoping that the talks will be progressive to the case.
Canadian Dollar Could Be Heading Into a Dovish Period as Oil Prices No Longer Providing the Support of the Past
Analysts at Credit Suisse, a Swiss investment bank, noted that CAD is unlikely to receive the support from rising oil prices that may have been the case in previous years. Shahab Jalinoos suggested that Canadian oil prices have not followed Brent and WTI higher in recent months, claiming that transportation bottlenecks may be partly to blame as they restrict Canada’s access into the global oil market. Therefore, he suggests that CAD may come under pressure in the upcoming months which would see CAD take a dovish turn as the BoC attempts to make corrections.
UK Enters Brexit Negotiations on the Back of Gains on the Eur and USD
Yesterday saw the UK PM Boris Johnson enter into Brexit negotiations with the European Commission President Ursula Von der Leyen. GBP had recorded gains against both the Euro and the USD before the talks on the back of optimism surrounding the talks. Both parties agreed that these negotiations would be far more direct and efficient than those of the previous three years. von der Leyen gave a pre-meeting speech at the London School of Economics in which she stated that the EU is ready to agree on an ambitious and comprehensive Free Trade Agreement but noted that there would not be enough time for this to be agreed by the end of 2020. Therefore, both sides must prioritise what they want to be agreed upon before the December deadline in order to avoid a no-deal Brexit situation.
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