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USD to CAD Update: Canadian dollar moves up modestly as oil reaches new highs
Oil prices jumped further this morning as OPEC+ elected not to raise November quotas beyond previously announced increases. The decision to stick with the status quo comes despite the fact that oil prices are much higher now than when those plans were first put in place. WTI (the North American oil reference price) is now at its highest level since 2014 while Brent (the global reference price) is now at the highest level since 2018. Oil prices have been surging for a few weeks now, mostly because of a shortage of natural gas which is causing a switch to oil products for certain energy requirements. The Canadian dollar, which is typically very sensitive and highly correlated to oil has not moved up as much as one might expect in the last few weeks. Nonetheless, this morning, the loonie is up 0.6% in response to the latest jump in oil prices and is now at its highest level in a few weeks. USD to CAD begins the final quarter of 2021 at 1.258 (CAD to USD is at 0.795). Stocks are down slightly after a big surge on Friday. Investors are once again watching bond yields which are beginning to creep up again. If rising yields become the market’s focus, you can expect the Canadian dollar to give up its modest gains despite higher oil prices.