Oil touched its highest level in six years after OPEC+ talks failed to produce an agreement on a supply increase. With the current deal set to expire in August, it is not clear whether this means that the current quotes will remain in place or whether some members might break ranks altogether. Oil prices have retreated somewhat overnight as the market adjusts for the possibility that the UAE might break away from the cartel and produce at will. Regardless, oil (WTI) is up 57% so far in 2021 and one of the main reasons for the increase in the value of the Canadian dollar over that same period (the other reasons being the Bank of Canada’s hawkish tilt and the faster-than-expected global recovery). With the market fully opening today after the Canada Day and Independence Day in the US, and flows still lighter than usual, the price action today is not particularly informative. Still, the US dollar is showing strength across the board as disappointing investor sentiment out of Germany is pushing flows towards the US dollar. This morning, the US dollar is up 0.6% against CAD with the USD to CAD now trading comfortably above 1.24.
