Oil is down $5.30 on the announcement of a 180 million barrel release of oil from the US strategic petroleum reserves but the Canadian dollar has shrugged it off.
The White House said it will buy the oil back to refill the SPR when it's cheaper and I think that's part of the reason why. So while it might mean lower prices for oil now, it will mean higher prices later.
Looking out the oil futures curve, the contract for next March is only down 90-cents.
On top of that, today's preliminary February Canadian GDP number was +0.8% and that was with some fairly-extensive lockdowns. Given the reopening in March and the insane price rises in Canadian housing, I expect some exceedingly strong consumer numbers through the summer along with a hawkish BOC. That should keep a bid in the loonie.
The next BOC is April 13 and we may stay around 1.25 until then but a 50 bps hike will kick off a fresh leg lower to 1.2000.
