Canadian Dollar Steady After Weakening as Crude Oil Slides Lower

The Canadian dollar is trading somewhat steady against the US dollar after weakening to a seven-week low once again as a result of the slide in crude oil prices. At the time of writing, USD/CAD is trading around 1.3

In the previous session, the Canadian dollar declined to the lowest level seen since December 11 as fears of the coronavirus outbreak impacting global economic growth came back to worry markets. The risk sentiment is off in global markets as the number of cases and the death toll keep rising, and countries issue advisories against traveling to and from China.

Any reduction in the demand for crude oil as airlines suspend flights to China and China shuts down factories to contain the virus will weaken the Canadian dollar, as crude oil is one of Canada’s most important exports. The most recent EIA report which showed a surprising build in US crude inventories and weakened oil prices further also aided in driving weakness in the CAD.

Canada’s GDP data for November 2019 is due to release on Friday. Ahead of the GDP release, the BOC has already hinted at a possible rate cut in the future if economic growth in Canada weakens.