Oil prices drives dollar

Oil prices drives dollar

The Canadian dollar was pushed to its highest level in September on Wednesday after crude oil prices hit a two-month peak.

The November crude contract was up $1.18 to US$70.77 per barrel, just short of a high set July 13.

The Canadian dollar traded at an average of 77.24 cents US compared with an average of 76.97 cents US on Tuesday.

The loonie started the day lower on NAFTA uncertainty but recovered following an inventory report showed another sizable draw in crude stockpiles, says Candice Bangsund, portfolio manager for Fiera Capital.

She said crude prices rose on the report that said U.S. refinery demand was strong amid increasing global economic growth.

“You’re seeing supplies being reduced and of course on top of that you have some geopolitical uncertainty supporting prices,” she said referring to the potential for supply disruptions from Iran and the hurricane that struck North Carolina.

Fiera has a mid-$70s target for oil and an 83 cents US target for the Canadian dollar.

She said the march up to these levels in the coming months depend on how things develop on the trade front. The optimistic outlook would be undermined by a breakdown in NAFTA negotiations or a full-blown trade war between the U.S. and China.

But Bangsund says her base case doesn’t include those eventualities.

Canada’s main stock index decreased Wednesday.

The S&P/TSX composite index lost 46.12 points to 16,149.92, its low point for the day.

The market was pulled down by the health-care sector, telecom and industrials, while metals and gold both gained almost 1.5 per cent.

Health care dropped 3.1 per cent on lower prices for cannabis companies Aphria Inc. and Canopy Growth Corp.

error: Content is protected !!