The price of energy surged 8.33% this week. West Texas is trading at $50.75 per barrel in the aftermath of a surprise Organization of the Petroleum Exporting Countries production cut agreement at the group' meeting in Vienna. The shock came for the fact that after working on a similar deal since March of this year, the agreement has faced several public failures when it was only a freeze of production.
Despite crude oil’s massive rally on the back of the OPEC news, the Canadian dollar, which tends to correlate strongly with oil prices, has hardly moved against its major rivals. Indeed, the U.S. dollar/Canadian dollar (USD/CAD) currency pair momentarily turned positive.
The Canadian dollar has been among the weakest of currencies in G10 in recent days. The sell-off has been sparked by the Bank of Canada’s Governor, Stephen Poloz, who on Wednesday said the central bank “actively” discussed the prospects of adding more stimulus into the economy, but in the end decided to keep rates unchanged.
The loonie is back in the news today after a run on relatively poor economic data from the Great White North. Canadian retail sales came in at -0.1% month-over-month in July, versus an expected gain of 0.2% m/m. Excluding volatile automobile purchases, sales missed by even more at -0.1% vs. 0.5% eyed.