USD/CAD: The impact of lower oil investment - CIBC

Andrew Grantham, analyst at CIBC, sees the USD/CAD trading in the lows 1.30’s during 2019 amid lower oil investment. 

Key Quotes: 

“One barrier to higher investment, and thereby more rate hikes and a stronger C$, was removed by the signing of the USMCA agreement. However, another took its place—the large spread between WCS and WTI oil prices and more recently lower global benchmarks. That spread has encouraged a weaker C$ compared to its past relationship with WTI. Oil sector investment was already starting to fall in the first half of the year, in contrast to the trend stateside.”

“That lower oil investment likely outweighs any spending made by the manufacturing sector now that trade uncertainty has eased, which could slow GDP growth, prevent the BoC hiking more than twice, and as such keep USDCAD in the low 1.30’s in 2019.”

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