The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate remained in a tight range on Friday ahead of Canadian inflation figures.
Friday’s North American inflation data is likely to be the most influential event in the market and therefore the ‘Loonie’ could fluctuate significantly. The Bank of Canada (BOC) Consumer Price Index is expected to soften from 2.2% to 2.1% in February year-on-year.
The price of oil has fallen dramatically since July 2014 as a global crude glut weighs on the commodity and the Organisation of Petroleum Exporting Countries refuses to cut production to counteract the depreciation.
Crude oil rose mid-week when the Federal Reserve made the decision to keep rates on hold and caused a US Dollar tumble.
Analyst Phil Flynn commented: ‘It’s Dollar play all over again today. The fact that the oil market is oversupplied is a given, so the only real variable now are currency moves and how they impact commodities demand.’
Even though there’s been around a 60% depreciation in oil prices since the summer, OPEC refuse to cut output. Kuwait oil minister Ali al-Omair stated: ‘We don’t want to lose our share in the market.’
Rivalry between OPEC and US shale oil producers has heightened and some economists suggest OPEC’s stubbornness in oil production is an attempt to price US companies out of the market.
Meanwhile, the Australian Dollar was offered a little support when Reserve Bank of Australia (RBA) Governor Glenn Stevens suggested the Australian economy was likely to remain out of recession—an event some economists had forecast.
Stevens stated: ‘If we come through this terms of trade event with neither a major outbreak of inflation in the upswing nor a major crash in the downswing, even if we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind, let alone of this magnitude.’
‘I still think that is the most likely outcome.’
The Australian Dollar to Canadian Dollar exchange rate could be impacted by Tuesday’s Australian Conference board Leading Index, as well as by China’s HSBC Manufacturing Purchasing Managers Index (PMI).
The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate is residing at 0.9743. The Canadian Dollar to Australian Dollar (CAD/AUD) exchange rate is trending in the region of 1.0269.
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