July 19, 2021
USD/CAD: Loonie traded around a breakout zone last week, having passed through 1.2500 and closed above 1.2600 for the first time in two months. As for now, the pair keeps trading above this level and if it succeeds to take hold there, it will be able to rise to the 1.2750 level. It’s important to note that the expected Bank of Canada $1 billion reduction in bond purchases and unchanged base rate almost didn’t affect USD/CAD prices. The experts now focus more on the US quantitative easing program. When reductions begin, likely before the end of the year, Treasury rates will rise and that should lead USD/CAD prices to climb higher.
GBP/USD: Cable showed a bearish dynamic at the end of the week, having closed near July’s low at 1.3730. The pair gained some points at the beginning of the day, supported by comments from BOE’s officials, who hinted at reducing their assets purchase program sooner than anticipated. However, traders took it without any interest, as rates remain at record lows, and there are no signs that the Bank of England would take that first step towards policy normalization. The UK’s calendar had nothing to offer on Friday but today Bank of England policymaker Haskel will be making a speech that may include hints on the future of monetary policy. On Saturday, the UK reported the biggest one-day increase in COVID infections since January. Despite this, the UK is ready to reopen the economy today.
WTI: Oil prices started the week volatile, with WTI dropping and growing following weekend news. WTI is currently trading flat again, but before that, it fell to a $71 low. Oil is suffering on the back of expectations of growing supplies and a rise in coronavirus cases that could lead to lockdown restrictions and depressed demand, which could also affect canadian dollar prices, which we discussed earlier. OPEC agreed to add more oil supplies to the market from August after Saudi Arabia and the United Arab Emirates resolved a dispute that was blocking the deal. On Thursday it reported that global oil demand is going to increase next year, returning to the levels seen before the pandemic, about 100 million barrels per day, led by demand growth in the United States, China and India.