On Monday, the Canadian dollar weakened slightly against the US dollar. The fall in oil prices limited support for the commodity currency, although the decline in the US currency restrained losses.
Rate and Initial Dynamics
On Monday, the Canadian dollar showed a slight weakening against the US dollar. The USD/CAD pair rose to the level of 1.3973 against 1.3955 at Friday's close. This corresponds to approximately 71.57 US cents per Canadian dollar.
Pressure from Oil
The decline in oil prices became the main factor limiting support for the Canadian currency. WTI quotes fell by approximately 3.7 percent to 109.23 dollars per barrel, while Brent lost 3.8 percent and reached 100.14 dollars. The fall occurred after a strong rise in October, when prices reached six-month highs. The reason was the expectation of reduced risks of energy supplies from the Middle East.
Role of the US Dollar
The weakening of the US dollar partially offset the pressure on the Canadian dollar. The US dollar index fell to a monthly low. Investors reduced protective positions amid optimism about negotiations between Iran, Qatar and the US, which could reduce geopolitical tensions.
Opposing Factors
Further dynamics of the Canadian dollar will depend on the balance of two trends. A steady decline in oil prices could worsen Canada's trading conditions. At the same time, progress in Middle East negotiations will continue to put pressure on the US dollar.
Data Calendar
On Monday, investors are watching business activity indices in the manufacturing sector. The S&P Global indicator for Canada will be released at 17:30 Moscow time, and the ISM index for the US at 18:00. On Friday, employment reports are expected in both countries, which could provide new signals about the economy and interest rates.