Crude oil may start to retreat as IEA pledges to ensure enough supply, long USD/CAD at dip?
While Bank of Canada’s meeting tonight may inspire a tactical round of short-covering in the Canadian dollar, investors should use that as an opportunity to go long on USD/CAD.
- Tonight, Canada’s policymakers may sound less dovish than what the markets are pricing in for, given that it’s too early for the BoC to signal that the rate hike cycle is over.
- We expect the Bank of Canada to leave its overnight lending rate unchanged at 1.75% on April 24.
- US-Canada 2-year yield spread was slightly wider at about 77bps, leaning towards the higher end of its range for this month.
- Oil pulled back from a six-month high as an industry report signalled a gain in US crude inventories partly offset concerns over America’s campaign to halt Iranian exports.
- The International Energy Agency also said it’s ready to act if necessary, to ensure the market is well-supplied, according to a statement. It mentioned global oil markets are currently at comfortable levels of spare capacity, and that it will continue to monitor closely and remain engaged with major producers and consumers.
Fullerton Markets Research Team
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