The Canadian dollar extended its early weakness against the other major currencies in the Asian session on Monday, as oil prices extended their slide.
Crude oil for April delivery is currently down $0.48 to $44.36 a barrel. Concerns grew that capacity of the U.S. to store excess oil is running low, and a strong U.S. dollar added to the woes.
The International Energy Agency warned global prices may fall further as supplies continue to mount, with U.S. producers still pumping crude despite tightening storage facilities.
The world’s oil watchdog warned the recent stabilization in crude oil prices is nothing but a “facade.”
Meanwhile, Baker Hughes on Friday reported that the number of U.S. rigs actively drilling for oil and natural gas as of March 13 dropped by 67 rigs from last week to 1,125. However, the lower rig count did not seem to have an impact on crude oil after the IEA report with weekly inventories also rising more than expected.
The U.S. Department of Energy’s weekly petroleum status report showed last week that stockpiles in the world’s top crude consumer climbed to a fresh record high of 448.9 million barrels.
Investors now await the upcoming crucial Federal Open Market Committee meeting due on Wednesday, when the Fed could provide cues on interest rate hikes.
Last Friday, the Canadian dollar fell 0.73 percent against the yen, 0.43 percent against the U.S. dollar and 0.12 percent against the euro.
Amid expectations that the U.S. Federal Reserve will begin monetary policy normalization sooner than later in the FOMC meeting this week, the CAD has weakened around 2.64 percent against the U.S. dollar and 2.03 percent against the yen, since March 5. The Canadian dollar also dropped about 1.26 percent against the Australian dollar since March 10.
In the Asian trading today, the Canadian dollar fell to nearly a 2-week low of 0.9796 against the Australian dollar, from Friday’s closing value of 0.9742. The loonie may test support near the 0.99 region.
Against the U.S. dollar, the yen and the euro, the loonie edged down to 1.2816, 94.63 and 1.3473 from last week’s closing quotes of 1.2767, 94.87 and 1.3410, respectively. If the loonie extends its downtrend, it is likely to find support around 1.28 against the greenback, 93.50 against the yen and 1.38 against the euro.
Looking ahead, Swiss retail sales for January and producer and import prices for February are due to be released.
In the New York session, U.S. industrial production for February and U.S. NAHB housing market index for March are slated for release.
At 2:35 pm ET, European Central Bank President Mario Draghi will deliver a speech at the SZ Finance Day 2015 “The Future of the Finance Industry – Between Growth and Regulation” summit in Frankfurt.
European Central Bank board members Sabine Lautenschlager and Peter Praet, Germany’s Bundesbank board member Andreas Dombret and Germany’s Bundesbank Deputy President Claudia Buch are also expected to speak at the summit.
The material has been provided by InstaForex Company – www.instaforex.com