Obama is making a speech on climate change today and the main risk for FX is in the Canadian dollar. A decisions on the Keystone XL pipeline isn’t expected until the fall but Obama is poised to toughen the conditions, according to a report in the Huffington Post (AP later had a similar report later).
President Barack Obama will ask the State Department not to approve the construction of the controversial Keystone XL pipeline unless it can first determine that it will not lead to a net increase in greenhouse gas emissions, a senior administration official told The Huffington Post.
They report that the pronouncement won’t kill the project outright, but ensuring that it meets a basic environmental standard.
The initial spin on this story is that it’s a big positive for USD/CAD but I’m not so sure. The Canadian oil is already being refined and burned, so that won’t change the overall carbon emissions. The only thing that could create pollution is the pipeline construction, which I don’t see as a big factor. If anything, this caveat rings hollow and it may only be semantics to placate the environmental lobby and ultimately that would make pipeline construction more likely.