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Canadian Dollar to US Dollar Exchange Rate Falls as Oil Tumbles to 4-Year Low

Published: 27 Nov at 12 PM Tags: Dollar Exchange Rate, Australian Dollar Exchange Rate, Currency Exchange, Canadian Dollar Exchange Rate, UK, Economy,

The Canadian Dollar softened against the US Dollar in a session where trade of the ‘Greenback’ is muted due to the closure of US markets for the Thanksgiving Holidays.

Despite the US markets, being closed the ‘Loonie’ still fell as investors favoured the safer ‘Greenback’ over the riskier ‘Loonie’. Oil prices have played a major part in determining the strength of the currency.

Oil prices declined to a four-year low due to speculation that OPEC will choose to refrain from tapering output at its eagerly anticipated meeting. The sharp fall in oil prices also had a negative impact upon other currencies linked to oil production.

‘OPEC is the main event. The Saudi’s actions over the past month quite clearly indicate to the market that OPEC is unlikely to agree to production cuts, or if they do, the market will doubt the intent to deliver,’ said Michael McCarthy, chief strategist at CMC markets in Sydney.

The cause for the tumbling oil prices has been an oversupply in the market. Due to the abundance of the commodity on the markets, prices have fallen steeply. The hesitation by OPEC to taper output is seen by some economists as the Arab nation’s attempts to counter the booming US oil industry.

The signals from the various members appear to suggest that the Gulf oil producers (Kuwait, Qatar, UAE and Saudi Arabia) are set to reject demands from other members (and indeed Russia and Mexico) for an output cut. They appear to be more concerned about “guarding market share”, which in turn will leave even more questions about the precarious budget positions of the other members,’ said Marc Oswald, city analyst at ADM Investor Services.

The Canadian Dollar could further declines against the US Dollar and other major peers later in the session if the latest Canadian Current Account data shows an increased deficit. With oil prices, falling so sharply the deficit is likely to widen.

As the week, draws to a close market attention will focus on Canadian GDP data. Economists are forecasting that the nation’s economy will have expanded by 0.6% on a quarterly basis. On an annual basis GDP, is expected to rise by 2.4%. The data has a chance of coming in below expectations, as falling commodity prices are likely to have affected the nation’s exports.
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